OCC Hikes Max Fee for Surprise Losses, Effective Now
Published Date: 4/8/2025
Notice
Summary
The Options Clearing Corporation (OCC) just updated the maximum fee it can charge for unexpected operational losses, following its capital management plan. This change affects traders and firms using OCC’s services and takes effect immediately, helping keep the system strong and ready for surprises. The new fee update means everyone knows the max cost if things go sideways during operations.
Analyzed Economic Effects
6 provisions identified: 0 benefits, 5 costs, 1 mixed.
Maximum Operational Loss Fee Raised
OCC increased the maximum aggregate Operational Loss Fee in its fee schedule from $182,000,000 to $211,000,000. This is the top amount OCC could collect to cover operational losses before subtracting any previously charged and not refunded fees.
Example Per-Member Charge Shown
OCC gives an example: if the Operational Loss Fee were charged to 101 Clearing Members (the number as of December 31, 2024), the maximum per-Clearing-Member fee would be approximately $2.09 million. The actual per-member amount will vary with the number of Clearing Members at the time of any charge.
When Members Would Be Charged
OCC would charge an Operational Loss Fee if its Liquid Net Assets Funded by Equity (LNAFBE) falls below 90% of the Target Capital Requirement (i.e., below $257.4 million) or stays below the Target Capital Requirement ($286 million) for 90 consecutive calendar days. In that event, OCC would charge enough to raise LNAFBE to 110% of the Target Capital Requirement.
Fee Allocated Equally to Clearing Members
OCC will allocate any Operational Loss Fee equally across all Clearing Members at the time of the charge, rather than by usage or risk. OCC states the fee is intended to be equally applicable to all Clearing Members.
Tax Gross-Up May Increase Fee Size
OCC may apply a tax gross-up to the Recovery and Orderly Wind-Down (RWD) amount when calculating the Adjusted RWD Amount if the operational loss that caused the shortfall is not tax deductible. That gross-up would increase the amount needed to be raised through the Operational Loss Fee.
Timing: Immediate Filing, Operative After CFTC Certification
OCC filed the fee change on March 27, 2025 and it was immediately effective upon filing, but OCC will not make the fee operative until after self-certification with the Commodity Futures Trading Commission under CFTC Regulation 40.6. The SEC may also suspend the filing within 60 days of the filing.
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