OCC revamps regulatory oversight committee following SEC fine
21 October 2019 Chicago
Image: Shutterstock
The Options Clearing Corporation (OCC) is seeking to establish a new regulatory board-level committee in order to demonstrate its commitment to regulatory compliance in the wake of its recent run-in with the US Securities and Exchange Commission (SEC) for risk management failures.
The new committee, which will meet quarterly, will replace the OCC’s current regulatory oversight working group and will offer guidance in relation to to the conduct of OCC’s core clearance and settlement activities.
The working group will be disbanded once the new group is in place.
In its filing to the US SEC to request a rule change to its charter to allow for the formation of the committee, the OCC noted that the committee would operate separately from its current audit committee and would complement the work done by independent consultants on regulatory compliance matters.
David Prosperi, senior vice president, communications, for the OCC, explained that the SEC had not required it to create the new committee until 2020 but that the OCC “chose to proactively move it forward now to demonstrate our continued strong commitment to compliance with applicable regulations in the conduct of our core clearance and settlement activities”.
In October, the OCC was handed $20 million fine by regulators for failing to manage certain market risks.
The SEC and the Commodity Futures Trading Commission (CFTC) found the OCC to have “failed to establish and enforce policies and procedures involving financial risk management, operational requirements, and information-systems security”.
The SEC’s investigation also found that OCC changed policies on core risk management issues without obtaining the required approvals.
The new committee, which will meet quarterly, will replace the OCC’s current regulatory oversight working group and will offer guidance in relation to to the conduct of OCC’s core clearance and settlement activities.
The working group will be disbanded once the new group is in place.
In its filing to the US SEC to request a rule change to its charter to allow for the formation of the committee, the OCC noted that the committee would operate separately from its current audit committee and would complement the work done by independent consultants on regulatory compliance matters.
David Prosperi, senior vice president, communications, for the OCC, explained that the SEC had not required it to create the new committee until 2020 but that the OCC “chose to proactively move it forward now to demonstrate our continued strong commitment to compliance with applicable regulations in the conduct of our core clearance and settlement activities”.
In October, the OCC was handed $20 million fine by regulators for failing to manage certain market risks.
The SEC and the Commodity Futures Trading Commission (CFTC) found the OCC to have “failed to establish and enforce policies and procedures involving financial risk management, operational requirements, and information-systems security”.
The SEC’s investigation also found that OCC changed policies on core risk management issues without obtaining the required approvals.
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