OCC Plans Margin Fee to Tame Intraday Trading Risks
Published Date: 1/22/2025
Notice
Summary
The Options Clearing Corporation (OCC) is planning to add a new fee called a margin add-on charge to all clearing member accounts. This charge helps reduce risks from trading during the day and overnight. The change will give members more time to get ready and follows new SEC rules, aiming to keep the market safer and smoother.
Analyzed Economic Effects
5 provisions identified: 0 benefits, 4 costs, 1 mixed.
New Intraday Margin Add‑On
If you are a Clearing Member, OCC will add a new Intraday Risk Charge (a margin add-on) that applies to all Clearing Member margin accounts (except certain CME cross‑margin accounts). OCC reports the add‑on would have generated about $1.0996 billion in additional margin in aggregate (less than a 1.1% aggregate increase) over September 2023–September 2024.
Breakdown Of Who Pays More
OCC estimates the add‑on distributes across account types as follows: Market‑Maker accounts about $276.6 million, Firm accounts about $306.3 million, and Customer accounts about $516.7 million, totaling about $1.0996 billion. Of the ten most‑impacted firms, average daily margin percentage increases ranged from about 1% to under 15%, equal to roughly $22 million to $315 million per firm (based on Sept. 2023–Sept. 2024 data).
How the Charge Is Calculated
OCC will calculate the Intraday Risk Charge monthly using the previous month's data as the average of the verified peak intraday risk increases observed between 11:00 a.m. and 12:30 p.m. Central Time. OCC may increase or decrease the charge for particular accounts based on account‑specific circumstances and may adjust more frequently than monthly when warranted.
Intraday Margin Call Timing And Minimum
OCC will use a single scheduled intraday collection time at or around 12:00 p.m. Central Time to collect intraday margin calls tied to monitored breaches; unscheduled calls remain possible in extraordinary circumstances with senior approval. OCC has a $500,000 minimum threshold for issuing such intraday margin calls, and data show there would have been about 1,024 potential margin calls during September 2023–September 2024 under the proposal.
Exclusions and Special Cases
The Intraday Risk Charge will not apply to cross‑margin accounts in OCC's cross‑margining program with CME (those accounts currently do not support intraday position feeds). Execution‑Only Clearing Members would have generated about $23.4 million in aggregate under the amended proposal (down from $39.4 million under the initial filing). Extended trading hours (ETH) risk controls and any ETH margin add‑on charges will continue to operate separately from this Intraday Risk Charge.
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