2022 highlighted one of the best features of the American financial system: our ability to innovate, which drives opportunity and maintains our role as an economic leader in the global marketplace. While new approaches and technologies can experience growing pains as we saw in 2022, innovation is a critical part of our ongoing evolution. It also underscores the value and safeguards of traditional market infrastructures.
As a Systemically Important Financial Market Utility (SIFMU), OCC is committed to harnessing the benefits that innovations can provide to market participants in a way that upholds our daily obligations and role as a steward of secure markets for all investors. We are innovating and evolving OCC, while enhancing our existing operations to promote stability and market integrity every day.
We take our role as a SIFMU very seriously, and our entire organization is committed to striving for excellence in fulfilling our important role in the marketplace. As referenced in the CEO letter from John Davidson and Andrej Bolkovic, we reached settlements with the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) regarding OCC’s error concerning the implementation of the liquidation cost charge in the calculation of our Clearing Fund. We sincerely regret the error that occurred and have since completed significant portions of the necessary remediation efforts to ensure systems are in place to swiftly detect similar issues should they ever occur again in the future. Our many stakeholders – exchanges, clearing firms, the investing public and our regulators – expect OCC to deliver at the highest possible level, and we are committed to exceeding those expectations.
Given options’ connection to underlying assets, the markets OCC clears are deeply intertwined with the broader financial equity markets that individuals and investors use to invest, save and manage risk. Delivering and maintaining secure, well-functioning financial markets, where growth and innovation can thrive, requires the joint efforts of many entities relying on each other to bring their best every day. This is a group effort made up of clearinghouses, exchanges, intermediaries, market makers and regulators working together to precisely manage the many moving parts that underpin our financial system and to educate and protect its investors. It is a big responsibility to operate in this ecosystem, and OCC is up to the challenge of doing our part, alongside our partners, to ensure confidence in the financial markets and the broader economy.
As a Systemically Important Financial Market Utility (SIFMU), OCC is committed to harnessing the benefits that innovations can provide to market participants in a way that upholds our daily obligations and role as a steward of secure markets for all investors.