The Options Clearing Corporation, which clears for all US options exchanges, is considering reducing the rebates it pays members as it examines ways to raise its working capital requirements to meet new rules.
The Chicago-based group is also considering asking its member-users for additional capital as part of the negotiations.
It is talking to its users about additional working capital in the wake of new rules from global regulators mandating greater use of clearing houses to guard against systemic risk. A clearing house guarantees a deal in the event of a counterparty default.
As the world’s largest options clearing house, OCC has been designated by US authorities as systemically important market infrastructure.
In turn, the world’s clearing houses have to meet tougher rules around transparency and capital requirements. Some have used their own funds to meet the rules. Others, like user-owned clearing houses OCC, LCH.Clearnet and CLS, which manages foreign exchange settlement risk, have sought additional funds from users or investors.
OCC, which is owned by US exchanges that trade options, has a low capital base of $25m to pay out to customers in the event of a default. The group also has a credit line of $2bn to call on.
Michael Cahill, the group’s new chief executive, told FT Trading Room that raising that total would be a priority for the year, possibly by asking members for more funds.
“All our money comes from member firms,” he said on the sidelines of the Futures Industry Association industry conference in Florida. “At the year end all the funds are rebated back.” One possibility could be “to reduce the rebate”, he said.
However, he said the group was examining other options, and no decision had been taken.
OCC is planning to increase the number of board members to 21 by appointing two new independent non-executives. They are expected to serve on some of the OCC’s oversight committees.
Last September it appointed Craig Donohue, the former head of CME Group, to a newly created role of executive chairman.
Mr Donohue will replace long-time chairman and chief executive Wayne Luthringshausen, who announced this year that he would leave at the end of the year after nearly 40 years at the helm.