Nearly two million stock loan trades took place on
OCC’s central clearing platform in 2016 –
a 37% increase on the previous year.
Primarily a derivatives clearing house, Chicago-based OCC
has been building up its central counterparty (CCP) services
for securities lending transactions in recent years.
It is currently the only US CCP for equity stock loan
transactions, where it guarantees return of stock or cash to
stock loan participants.
There are now 70 OCC clearing members using the service
conducting close to 5,000 stock loan trades daily with open
interest measuring approximately $190bn.
In December alone, the platform saw a 29% increase in
new loans from December 2015 with 177,826 transactions last
"We estimate that OCC presently clears about 10-15% of the
$2trn US equities stock loan market," said OCC’s
Scot Warren last year.
"This growth reflects a continued shift toward CCP
New York-based securities finance company EquiLend entered
into the central clearing market for stock loan trades in
The company acquired AQS, a platform which facilitates
clearing and settlement via OCC.
"Momentum has been building in the past two years in support
of CCPs in the securities finance marketplace," EquiLend
chief executive Brian Lamb said at the time.
"Balance sheet costs, risk weighting and tougher
capital-adequacy requirements have highlighted to the industry
the potential benefits of using central clearing services.
Early adopters of CCPs in the securities lending market
argue that opportunities for credit, capital and collateral
efficiencies make central clearing houses a compelling value
proposition for market participants.
Others have adopted a wait and see approach to CCPs due to
operational concerns, unknowns around risk mapping,
indemnification, pricing and reporting.