SEC Greenlights OCC's Wordy Repo Agreement Overhaul for Liquidity
Published Date: 5/21/2025
Notice
Summary
The Options Clearing Corporation (OCC) is updating some important terms in its agreement with a bank to keep its money backup plan strong and ready. The SEC reviewed these changes, asked a few questions, and now says, “No objections!” This means OCC can move forward with better financial safety measures, helping protect everyone who trades options starting soon.
Analyzed Economic Effects
2 provisions identified: 1 benefits, 1 costs, 0 mixed.
OCC Authorized to Add $1 Billion Repo Line
The SEC notified that OCC may implement an amended master repurchase agreement to permit a limited right of rehypothecation so a bank will provide a committed Bank Repo Facility of up to $1 billion. OCC was authorized to implement the change as of the date of this notice, May 15, 2025, to increase its committed liquidity resources.
Clearing Members’ Collateral Substitutions Can Be Refused
The notice states OCC may refuse a Clearing Member's request to substitute Clearing Fund securities if those securities have been used by OCC as part of the Bank Repo Facility. OCC's rules (OCC Rule 1006(f)(4)) allow refusal of substitution for securities OCC has taken possession of to borrow funds.
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