OCC says pushing ahead on over-the-counter plan

BOCA RATON, Fla., March 12 Fri Mar 12, 2010 4:14pm EST

BOCA RATON, Fla., March 12 (Reuters) - The Options Clearing Corp., which guarantees all stock options traded on U.S. exchanges, is making progress on plans to begin backing trades made in the over-the-counter equity derivatives market, a top clearinghouse official said on Friday.

Among the first contracts could be variance swaps, used by hedge funds and other speculators to bet on swings in stock indexes, and "vanilla" options that are more standardized than many off-exchange contracts, OCC Executive Vice President Mike McClain said at the Futures Industry Association's annual meeting.

Global clearinghouses are rushing to set up or expand systems to handle over-the-counter contracts, jumping ahead of regulatory reform that has yet to mandate such moves.

CME Group Inc (CME.O), IntercontinentalExchange Inc (ICE.N), and LCH.Clearnet are also pressing ahead on clearing other asset classes.

"OCC is vigorously pursuing a clearing solution for OTC equity derivatives with the hopes of clearing in 2010 or 2011," McClain said.

Since December, OCC officials have been meeting regularly with representatives from about a dozen broker-dealers and half-a-dozen hedge funds to hash out details, he said.

CME's clearinghouse, whose December launch of credit default swaps clearing trailed ICE by about nine months, is testing its system for clearing interest-rate swaps with data from Fannie Mae and Freddie Mac's combined $3 trillion swaps portfolio. (Reporting by Ann Saphir. Editing by Robert MacMillan)

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