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2022 Annual Report

Message from the CEO

Managing Continued Growth

As we reflect on the past year, we see significant change as a constant. We saw it in clearing volume, market operations, regulation, our operations and our people. The way OCC manages through change is the same: a pursuit of resiliency and excellence in execution. 

Over the course of 2022, OCC successfully cleared record-breaking options volume, while continuing to invest in our transformation, which will comprehensively redevelop and modernize OCC’s technology infrastructure across our clearing, risk management and data management systems.
 
The average daily volume of cleared contracts at OCC was 41.3 million in 2022, up 4.5 percent compared to the previous year. When OCC’s clearing platform ENCORE was first introduced in 2001, total volume for that year reached 781 million contracts. OCC now clears more contracts than that yearly total in a single month, and our ongoing investments in OCC’s present-day and long-term resiliency and flexibility have allowed us to manage this continued market growth.

The rise in options trading is significant beyond our markets. OCC provides critical clearing, settlement and risk management for options trading that is often an element of individuals’ or institutions’ risk management strategies. This broader perspective highlights the critical role that OCC serves in the markets – a responsibility we take seriously.

The average daily volume of cleared contracts at OCC was 41.3 million in 2022, up 4.5 percent compared to the previous year.

Delivering Strengthened Operations and Risk Management

OCC continues to meet the growth of the U.S. listed options industry while we move forward with our transformation. Developing our new clearing platform Ovation, which is planned for a 2025 launch, is a significant program in both time and expense, but we made considerable advancements in 2022. At the same time, we made significant investments in our current operations and the legacy ENCORE clearing system. Highlights include:

Expanding Use of Cloud Computing

The financial services industry’s migration to the Cloud continues to be transformational in enhancing business agility, operational efficiency and risk management. 

Late last year, the Securities and Exchange Commission (SEC) issued a ‘Notice of No Objection’, regarding OCC’s Advance Notice filing in connection with our Cloud infrastructure proposal. This decision represents the culmination of several years of collaborative work with our regulators and clears the path for OCC to utilize the resiliency, security and capacity benefits of the Cloud for our critical services when we launch Ovation. 

It is vital that our critical systems remain continuously available to the U.S. listed options and futures markets that we serve. For this reason, OCC is also building an on-premises data center for the new Ovation platform in the unlikely event of a widespread, multi-region Cloud service disruption. 

Present Day Resilience: Investing in and Upgrading ENCORE

Our current ENCORE clearing system has been continuously developed and upgraded over the last 20 years and has served the marketplace well. We regularly assess our infrastructure and applications to ensure that they are able to support future volume projections. While we work toward Ovation’s launch, OCC continues to make investments to ensure ENCORE remains robust and resilient and is prepared to process further industry growth. We are confident OCC will deliver our services safely and reliably now and continuously through the 2025 launch of Ovation, which will bring flexibility features to match our resiliency.

On February 16, 2023, OCC announced settlements with the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) regarding OCC’s error concerning the implementation of its rule on Liquidation Cost Model Enhancements and its Liquidation Cost Charge. OCC self-identified the issue in 2021, cooperated with the SEC and CFTC investigations, and have undertaken remedial efforts to address the underlying issues. Moving forward, we are confident that if a similar error occurred, it would be swiftly detected and addressed. Although we sincerely regret the error, the broad remediation work we have undertaken in the wake of its discovery has further strengthened OCC’s resiliency.

Future Resilience and Flexibility: Renaissance Initiative Testing and Transition 

The changing needs of our exchange partners and market participants called for a new clearing platform that will give us more flexibility to respond to a diverse set of risks and to be able to process and accommodate new industry offerings. Ovation will provide our members and market participants with near real-time clearing, settlement and risk management capabilities, while also preserving OCC’s secure, efficient and reliable operations.

In responding to evolving market needs, OCC has taken a methodical, resiliency-first mindset in our approach to executing Ovation. Through continuous and careful testing and training we will ensure that Ovation is ready to serve and meet the standards of the industry we support. We are confident that we can deliver our innovative platform and know that it will provide welcome enhancements and capabilities to the markets we serve.

OCC continues to meet the growth of the U.S. listed options industry while we move forward with our transformation. 

Prioritizing our Colleagues and our Culture

None of these developments and accomplishments would be possible without the dedication and commitment of our OCC colleagues working together to advance our transformation. We have a strong team in place with a focus on retaining and hiring talented people – another key strategy to ensuring our continued resilience.

Our people are our greatest asset, which is why we aspire to create a culture of belonging at OCC and to develop an external community engagement posture to support the communities in which we work and live. 

In 2022, we continued to receive input from our Culture Leadership Team to shape our programs, policies and outreach, including Diversity, Equity and Inclusion (DEI). The DEI Council – a collaborative group of colleagues across OCC – also continued to provide leadership and governance to our DEI initiatives in 2022. We are grateful for their efforts, which make us stronger and more attuned to market participants’ needs.

A big part of our community engagement is driven by our Employee Network Groups (ENGs). These employee-led groups advance efforts to enhance equity by providing insight into cultural differences and stronger alignment with the communities in which we work and live. For example, our ENG Hispanic/Latino(a) Leaders and Allies (HOLA) worked together to donate to a scholarship program focused on supporting the development of young Latino professionals.

By the numbers, OCC and our employees gave more than $500,000 in charitable contributions to numerous organizations and donated more than 1,748 volunteer hours to DEI initiatives plus 256 volunteer hours to local charities. 

We are very proud that in 2022, OCC earned numerous industry awards and was recognized by top-tier organizations for our culture, our people and our services. Specifically:  

  • LinkedIn named OCC a Top Company to Work for in Financial Services
  • Risk.net named OCC Clearing House of the Year
  • GlobalCapital named OCC as the Americas Derivatives Clearing House of the Year
  • Built In named OCC a best large company to work for in Chicago and nationally
  • OCC was recognized as a Best Place for Working Parents in Dallas 

Our people are our greatest asset, which is why we aspire to create a culture of belonging at OCC and to develop an external community engagement posture to support the communities in which we work and live. 

Looking Ahead to 2023

As we continue our transformation with leadership changes, operational improvements and ongoing technology enhancements, we will reach new and exciting milestones in our journey. We remain committed to delivering on the promise of Renaissance and delivering operational excellence, while fulfilling our daily obligations to stakeholders and regulators as a SIFMU.

Change – both planned and unexpected – will continue to be a part of our calculation with a focus on how to manage it. Regardless of any change that we create or that happens around us, our overall goal is the same: delivering effective and efficient clearing, settlement and risk management services to all market participants. 

This is an exciting time for OCC and our industry. We are committed to fulfilling our purpose of ensuring confidence in the financial markets and the broader economy.


Andrej Bolkovic
Chief Executive Officer (April 2023 – Present)
Chief Executive Officer-Elect (September 2022 – April 2023)

John P. Davidson
Advisor to the Chief Executive Officer (April 2023)
Chief Executive Officer (2019 – March 2023)




   




 

This is an exciting time for OCC and our industry. We are committed to fulfilling our purpose of ensuring confidence in the financial markets and the broader economy.
About OCC
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