2020 Annual Report

Message from the Executive Chairman

On behalf of the Board of Directors and my OCC colleagues, I am pleased to share with you our 2020 Annual Report.

The unprecedented events of last year tested our organization’s ability to respond well and continue to support the markets we serve in the face of multiple, simultaneous challenges. For OCC, record volumes and significant market volatility in the face of a global pandemic, coupled with the rapid shift to remote operations, were pivotal moments and demanded a comprehensive response.

While our resiliency was put to the test in 2020, the circumstances enabled us to demonstrate to market participants that our organization was well prepared for such a significant event, and we were able to respond in a way that reinforced the confidence we have built in OCC’s ability to deliver in all types of market conditions.

The challenges of the year highlighted the vital importance of robust, resilient market infrastructures – especially clearinghouses that are central counterparties (“CCPs”) like OCC. Primarily operating in the background, clearinghouses are vital to the functioning of the markets. 

There is an expectation of perfection for CCPs – because they are the hub of the market ecosystem, acting as the seller to every buyer and the buyer to every seller.  As a systemically important financial market utility, OCC is keenly aware of this expectation and the criticality of the services it provides to the U.S. listed options markets.

Over the course of the last few years, we have made significant efforts and investments to transform the way we approach our responsibilities and to enhance our financial and operational resiliency, in support of fulfilling the expectations of market participants, regulators and the investing public.  We’ve evolved from being thought of as the “back office plumbing system” to being recognized managers of complex and systemic risk.

There are frequent and evolving policy discussions about the proper approach for managing and ensuring the resiliency of clearinghouses, and we support an environment of continuous improvement in that regard.  There is, however, markedly less attention paid to the dedicated individuals who work for these market infrastructures. 

OCC has a talented group of colleagues, many of whom - to phrase it simply - just know how the machinery works and take pride in accomplishing our important mission every day. Despite unprecedented trading volumes and market volatility, our colleagues were able to ensure the continued operations of our markets through their persistent focus and commitment. Central to that is our team’s impressive ability to anticipate and manage rapidly changing market, credit, liquidity and operational risks.

Our team works in shifts around the clock to ensure that all required processing is done on time, and that all those complex risks are managed.  They work with clearing members firms and market participants to resolve any issues or errors that may occur between the end of trading one day and the start of the next. These efforts are rarely, if ever, in the spotlight, but the dedication of these individuals is vital to ensuring stable and secure operations and prudent risk management in the U.S. options markets every day.  Through these challenging times, our team members worked more tirelessly than ever. SEC Chairman Jay Clayton took notice in March 2020 when speaking to the Financial Stability Oversight Council, observing that securities exchanges and CCPs have functioned orderly, and that “this has been accomplished in the face of record volatility and capital flows.” He went on to acknowledge that “this greatly reduces the possibility that this unexpected and unprecedented exogenous shock to our economy will transition to a systemic financial risk.”

For the millions of American households saving for their financial futures through investments, and for the stability of the markets overall, former Chairman Clayton’s observations are important. While asset values may fluctuate, the financial ecosystem’s ability to function must remain constant. This ability has been tested numerous times and at new levels over the past few months, and the system has carried on without disruption. 

In a year where retail investors have contributed to volume in such a significant way, the criticality of robust market infrastructure is underscored.  As such, I’d like to take this moment to acknowledge the entire OCC team and offer my deep appreciation for all that was accomplished in 2020. In addition, I’d like to thank our Board of Directors, as their collective expertise in risk management, technology, operations, compliance, regulatory policy, and auditing prepared the firm for the demands it would encounter during the pandemic.

While OCC has delivered on its mission every day since its founding in 1973, we are in a stronger position today as a result of our ongoing enhancements to our financial resiliency and technology, and yes, the dedication of our people to better serve the investing public.  Our successful processing of 2020’s unprecedented market activity affirms that those efforts are serving the markets well. 

In 2021 and beyond, we shall see whether 2020’s historic volumes are a pandemic-related outlier or the start of a fundamental shift in investor behaviors. If the former, OCC is glad to have risen to the occasion during these unusual times. If the latter, then we are ready to answer the call.

Craig S. Donohue
Executive Chairman


For OCC, record volumes and significant market volatility in the face of a global pandemic, coupled with the rapid shift to remote operations were pivotal moments that demanded a comprehensive response.