OCC announces US$1 billion committed repo facility

CHICAGO (January 20, 2015) – Today OCC announced the establishment of an innovative pre-funded, $1 billion committed repurchase facility with a leading pension fund. This new facility increases OCC’s overall liquidity resources from $2 to $3 billion, while diversifying OCC’s committed lenders to include qualified pension funds in addition to OCC’s existing participant base of banks and broker-dealers. Committed liquidity facilities are a critical resource to central counterparties like OCC, ensuring that sufficient capacity is maintained to fund payment obligations to clearing members in a timely way, and thereby promoting the uninterrupted flow of financial markets.

“We are very pleased to lead our industry by expanding the scope of committed liquidity facilities for central counterparties given the significant changes that are occurring in the banking industry,” said John Fennell, Executive Vice President of Risk Management at OCC. “With the phasing in of new bank capital requirements affecting these types of arrangements, we anticipate that the supply of committed credit facilities from banks may contract. Additionally, by working with qualified pension fund counterparties, this new facility fulfills our goal of reducing pro-cyclicality concerns given the significant concentration of our clearing member firms or their affiliates that also participate in our committed bank repurchase facilities or provide other banking services to OCC,” he further stated.

“As a systemically important organization, we must ensure that we have access to liquidity at all times,” said Craig Donohue, Executive Chairman of OCC. “Increasing our total resources and implementing this innovative solution to expand the range of qualified lenders that we rely upon will facilitate the continued growth of the U.S. options industry and the futures markets that we serve while further enhancing our resiliency,” he added.

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