OCC's Tech Overhaul Poised to Reshape Options Trading

In the heart of Asheville, NC, in a quiet corner of the bustling Options Industry Conference, Mike Hansen, the chief clearing and settlement services officer of the Options Clearing Corporation (OCC), sat down for an interview with John Lothian News for the JLN Industry Leader video series sponsored by the OCC. His demeanor was calm, but his words carried the weight of an industry on the cusp of significant change.

Hansen, a veteran with over two decades in the options industry, is at the forefront of several transformative initiatives. As the Dallas site leader for OCC, the world's largest equity derivatives clearing organization, he's overseeing a technological revolution that promises to reshape the landscape of options trading.

"We're fully prepared for the industry move to T+1," Hansen said, referring to the impending shift to a shorter settlement cycle. His confidence is tempered with a note of caution as he outlines the challenges ahead. "Going to T+1, we have one less day to manage risk. We have to ensure all our procedures are up to date and ready."

The conversation shifted to the OCC's ambitious Renaissance Initiative, a comprehensive overhaul of their clearing system. Hansen's eyes lit up as he described the upcoming industry testing for Ovation, the new platform set to replace the aging Encore system.

"Encore's architecture is over 20 years old," Hansen explains. "While it's reliable, it's not adaptable to new products." He paints a picture of a more agile future with Ovation's modular design, promising quicker responses to market demands and new product launches.

As the interview progresses, Hansen touches on the recent surge in trading volumes, a trend that has tested the limits of current systems. During extremely busy periods, "we can see upwards of 1200 trades per second," he said, a hint of pride in his voice as he affirms the system's resilience.

The conversation concluded with Hansen addressing two hot-button issues: the potential for Bitcoin ETF options and the rise of short-dated options. On Bitcoin, he has adopted a wait-and-see approach, emphasizing the need for regulatory approval before any action from OCC. Regarding short-dated options, his tone grew more serious as he discussed the ongoing efforts to manage the associated risks.

QUESTIONS
What is the status of the Renaissance Initiative?
When is testing for the Ovation platform?
Why are you transitioning from Encore?
Any difference in the technology?
What are OCC’s thoughts on clearing spot Bitcoin ETF options?
What is the impact of more short-dated options?

00:00:00 - Transition to T plus one
00:00:52 - Status of the Renaissance Initiative
00:01:11 - Testing for the Ovation platform
00:01:43 - Transition from Encore to Ovation
00:03:00 - Technology differences in the new system
00:03:23 - Clearing spot Bitcoin ETF options
00:03:54 - Impact of more short-dated options

#OptionsIndustryConference #T1Settlement #ClearingPlatform #EmergingMarkets #OCC #OptionsTrading #FinancialInnovation #EquityDerivatives #IndustryLeader #JohnLothianNews