Capabilities of Risk, Clearing and Data Systems will be enhanced to better serve market participants
To better serve its stakeholders and the users of the U.S. equity options and futures markets, OCC, the world’s largest equity derivatives clearing organization, today announced the Renaissance Initiative, a multi-year investment to comprehensively redevelop and modernize the company’s risk management, clearing and data systems.
“Last year was a turning point for OCC in terms of improving our risk and control environment and our ability to demonstrate compliance with our heightened regulatory responsibilities as a Systemically Important Financial Market Utility,” said Craig Donohue, Executive Chairman and Chief Executive Officer. “While we have more work to do to strengthen our foundational capabilities, we also must modernize OCC’s technology to better serve market participants.
“The Renaissance Initiative is perhaps the most important project undertaken by OCC in the past 20 years. When completed, it will enhance OCC’s resiliency, improve our compliance posture, and help us operate in a more effective and efficient manner. It also will make OCC a more nimble organization that will deliver transformational business capabilities to better serve the users of our market.”
John Davidson, President and Chief Operating Officer, added, “The Renaissance Initiative will provide OCC with the ability to operate clearing, data and risk applications based on a modular architecture. It will improve our real-time and extended hours risk management capabilities, drive operational efficiency through process engineering and automation, improve information transparency and service to clearing firms, and increase product development agility.”
OCC’s Renaissance Initiative will enhance the capabilities of its Risk, Clearing and Data Systems.
For Risk Management, the internally developed risk platform elements of the Renaissance Initiative build upon the program already underway at OCC with many features operating on Cloud infrastructure. The Renaissance Initiative will provide an environment for intra-day risk management, intra-day computations, pricing and re-valuation. It will enhance the efficiency and speed of margin, stress-testing and back-testing capabilities. The Renaissance Initiative also will increase transparency and insight for clearing members into exposures via ad hoc queries and real-time processing.
With respect to OCC’s Clearing Systems, following a lengthy and rigorous analysis, OCC has decided to use a combined approach, pairing internal work with the adoption of the TRADExpress Real Time Clearing (RTC) solution developed by Cinnober, which is being acquired by Nasdaq following completion of its successful tender offer. The solution delivers several benefits for OCC and its clearing members and participant exchanges, including enhancements to: ad-hoc reporting with new filtering functionality, control mechanisms throughout systems, application programming interfaces (APIs) that will make it easier to procure and submit data to and from the system, a functionally easier process to introduce new products, enhanced industry-standard futures processing (including Average Price Reporting and give-ups), and processing of clearing member trade agreements.
The development of OCC’s Data platform, which will be independent from its clearing and risk systems, will comprehensively address OCC’s historical data limitations. The Renaissance Initiative will build a proprietary data model to support OCC’s business that is separate and distinct from its current technology solution. OCC will have self-service capability for data discovery, search, and historical analysis. It also will have a scalable and secure centralized enterprise repository that can serve data to concurrent processing needs, including report generation, back-testing, and stress-testing.
“OCC’s Management Committee and Board of Directors determined that integrating our internally developed risk and data platforms with the clearing system and leveraging the commodity components available through a vended solution offers significant advantages to OCC,” Davidson noted. “This includes field-proven technology that has been deployed successfully in large scale operating environments like OCC, along with highly refined business applications and flexible plug-in architecture that will allow OCC to have full control over new product development. And by being scalable and resilient, it will support straight-through processing, real-time risk management and public cloud deployment.”
Donohue added, “The Renaissance Initiative is an exciting project for all of us at OCC. The successful execution of the Renaissance Initiative will provide OCC with a flexible technology infrastructure and enhanced capabilities to serve the investing public and to grow as an organization.”