SEC, CFTC hand down enforcement action against Options Clearing Corp.


The Options Clearing Corp. (OCC) will pay a $20 million penalty for failing to implement policies to manage certain risks as required by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

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The Chicago-based company ailed to establish and enforce policies and procedures involving financial risk management, operational requirements, and information systems security, regulators say. In addition to the fine, the OCC also agreed to undertake remedial efforts. Specifically, they will hire an independent compliance auditor to assess its remediation of the violations and subsequent compliance efforts.

OCC was designated as a systemically important financial market utility, which means it is subject to enhanced regulation and transparency standards for risk management. That is because disruption to OCC’s operations might be costly not only for itself and its members but other market participants or the broader financial system.

“As a clearing agency, OCC performs a range of services that are critical to the effective operation of the securities markets,” SEC Chairman Jay Clayton said. “Today’s resolution is intended to ensure that OCC will have appropriate policies and procedures in place to meet its obligations to our financial system.”

CFTC Chairman Heath Tarbert said that while clearing agencies have some discretion in crafting their risk management policies and procedures, they must be reasonable and take into consideration risks.

“Here, the SEC sought a resolution that would ensure compliance with the law,” Stephanie Avakian, co-director of the SEC’s Division of Enforcement. “OCC has begun its remediation efforts and has agreed to undertakings designed to resolve the identified deficiencies and fulfill its regulatory obligations.”

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