SEC greenlights OCC capital plan
16 February 2016 Chicago
Image: Shutterstock
The US Securities and Exchange Commission (SEC) has finally approved the OCC’s capital plan, following an independent review.
The SEC’s final approval means OCC can press ahead with the capital plan unabated.
OCC will issue a $39 million refund to clearing members and a dividend of $17 million to stockholder exchanges, and implement a new fee schedule marking a 19 percent drop in cost.
Both the refund and dividend will be paid in Q1 2016, following OCC’s financial statements, and the new fee schedule will begin on 1 March.
Shareholders’ equity will increase from $25 million to $247 million.
OCC initially received approval for its capital plan in H1 2015 but industry competitors BATS Global Markets, BOX Options Exchange, KCG Holdings, Miami International Securities Exchange and Susquehanna International Group filed petitions contesting approval of the capital plan, citing policy and competition concerns.
The petitions triggered an automatic stay of the approval, which OCC disputed in April 2015.
The SEC accepted OCC’s motion to lift the stay in September 2015, while simultaneously granting the petitions to review approval of the capital plan.
Dismissing the petitions on 11 February, the SEC said “given OCC’s critical clearing functions and its systemic importance, the commission agrees that having OCC increase its capitalisation is appropriate and in the public interest”.
“The capital plan does not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the [Exchange] Act.”
Craig Donohue, OCC executive chairman, commented: “We are pleased that the SEC has granted final approval of OCC’s capital plan.”
“Through this action, the SEC has confirmed that strengthening OCC’s capitalisation is a compelling public interest and has acknowledged OCC’s importance to the US financial markets as a systemically important financial market utility.”
The SEC’s final approval means OCC can press ahead with the capital plan unabated.
OCC will issue a $39 million refund to clearing members and a dividend of $17 million to stockholder exchanges, and implement a new fee schedule marking a 19 percent drop in cost.
Both the refund and dividend will be paid in Q1 2016, following OCC’s financial statements, and the new fee schedule will begin on 1 March.
Shareholders’ equity will increase from $25 million to $247 million.
OCC initially received approval for its capital plan in H1 2015 but industry competitors BATS Global Markets, BOX Options Exchange, KCG Holdings, Miami International Securities Exchange and Susquehanna International Group filed petitions contesting approval of the capital plan, citing policy and competition concerns.
The petitions triggered an automatic stay of the approval, which OCC disputed in April 2015.
The SEC accepted OCC’s motion to lift the stay in September 2015, while simultaneously granting the petitions to review approval of the capital plan.
Dismissing the petitions on 11 February, the SEC said “given OCC’s critical clearing functions and its systemic importance, the commission agrees that having OCC increase its capitalisation is appropriate and in the public interest”.
“The capital plan does not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the [Exchange] Act.”
Craig Donohue, OCC executive chairman, commented: “We are pleased that the SEC has granted final approval of OCC’s capital plan.”
“Through this action, the SEC has confirmed that strengthening OCC’s capitalisation is a compelling public interest and has acknowledged OCC’s importance to the US financial markets as a systemically important financial market utility.”
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