In 2014, OCC began offering clearing services for OTC products on S&P 500® index options. Transactions are transmitted to OCC via an approved OTC Trade Source and are guaranteed by OCC through a similar novation process as other OCC cleared products.
OTC options must be negotiated and matched OTC (not transacted on an exchange or exchange-like market). Clearing member clients must be eligible contract participants.
Following is a "no-action" letter from the SEC to OCC with respect to cleared OTC options and Exchange Act Rules 15c3-1 and 15c3-1(a). OCC received no-action relief from the SEC to permit OTC options to be treated the same as other listed options for purposes of Rule15c3-1, enabling broker dealers to use an approved theoretical options pricing model to calculate capital charges for positions in OTC options and market makers to trade in OTC options without making themselves ineligible for capital treatment.
In addition, the minimum capital charge for each OTC option under SEC Rule 15c3-1 will be $0.75, adjusted as appropriate for the size of the OTC option, not to exceed the market value in the case of long contracts in OTC options.
- Request for No-Action Relief with Respect to Cleared Over-the-Counter Options for Purposes of Rules 15c3-1 and 15c3-1a (PDF)
For auctions that include OTC options products, please refer to the following procedures:
- Auction Procedures (PDF)