Options trading is central to the complex, risk-adverse equity derivatives industry, and leading the clearing of such trades is The Options Clearing Corporation (OCC).
OCC is transforming from a process-centric to a risk-centric organization.
Founded in 1973, OCC is the largest such organization worldwide. As a highly regulated enterprise, it must promote the stability and financial integrity in the equity derivatives marketplace. The company also acts as a guarantor, ensuring the fulfillment of options trading contracts.
OCC largely operated behind the scenes until the financial crisis of 2007-2008. In response to the crisis, Congress and regulators focused new attention on the clearinghouse. It designated OCC as one of a handful of financial linchpins, alongside the largest banks in the country.
OCC, however, was unprepared for the attention. It lacked the technology, expertise, and resources to deal with the new regulatory regime and associated requirements.
By 2013, the Securities and Exchange Commission sounded the alarm. “The excessive number of repeat findings raises a serious concern about OCC’s overall commitment to establishing a culture of regulatory compliance,” the SEC wrote in a letter. “And, more specifically, its ability to timely and adequately address the [SEC] Staff’s findings.”
To survive, the OCC had to transform – its leadership, its culture, and its processes – to become risk-oriented. At the core of this shift to a risk-oriented culture: revamping its technology.
OCC’s motivations might be about risk management, but its transformation is all digital.
Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, Appian is an Intellyx customer. None of the other organizations mentioned in this article are Intellyx customers. Image credit: GotCredit.