OCC Tweaks Guaranty Payments: Behind-the-Scenes Safety Net
Published Date: 9/15/2025
Notice
Summary
The Options Clearing Corporation (OCC) is updating how it handles a special cash payment called the Guaranty Substitution Payment (GSP) when a member defaults. This change helps OCC better manage its money and risks during tough times, especially in stress tests. The update affects clearing members and aims to keep the system safer without immediate cost changes, with the SEC now asking for public feedback.
Analyzed Economic Effects
2 provisions identified: 1 benefits, 1 costs, 0 mixed.
OCC will use Final GSP in stress tests
OCC proposes to change its stress testing to use the "Final Guaranty Substitution Payment (Final GSP)" — the portion of unpaid amounts at NSCC attributable to OCC activity — instead of the larger hypothetical GSP it currently uses. OCC says this will limit liquidity demands to OCC-related settlement risk using a 12‑month lookback and could reduce over‑collection of resources from Clearing Members; OCC noted an example where family-level data included about $7 billion of activity while the Final GSP for the same Common Clearing Member was about $60 million. The change follows the Accord implemented May 28, 2024 and is subject to SEC review and comment through October 6, 2025.
OCC will still provision for two-day peak GSPs
Even after switching to Final GSPs, OCC would continue to provision liquidity to cover two consecutive days of peak Final GSP amounts on a rolling 12‑month lookback for relevant expiration categories. OCC states it may call for additional financial resources from Clearing Members (for example, Required Cash Deposits or increased margin), place members on Watch Level, or perform an intra‑month Clearing Fund resizing if forecasted settlement obligations including two days of peak Final GSPs approach or exceed OCC liquidity resources.
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