We talk to Craig Donohue, Executive Chairman & CEO, OCC following the firm’s hosting of the WFE’s IOMA conference earlier this month.
OCC recently hosted the 35th IOMA: WFE’s Clearing & Derivatives Conference in Chicago. Please tell us about the importance and impact of this annual forum to the global post-trade industry?
I am pleased that the WFE chose Chicago as the location for the 35th annual IOMA conference, as it reinforced the position of our city - the home of not only OCC, the world’s largest equity derivatives clearing organization, but also two of the world’s largest derivatives exchanges, CME Group and Cboe - as a global financial center.
Throughout the panel discussions and other interactions, it was clear that many of the issues from last year’s conference were still top of mind for the attendees. For those of us who are in the business of managing risk, this conference allows us to not only discuss how to address the current challenges we face as an industry, but also gives us an opportunity to look ahead and focus on how we can foster growth, innovation and thought leadership with the goal of better serving our market participants and the greater public interest.
The theme of IOMA this year was market integrity. How does OCC work to promote stable and secure markets?
We safeguard the integrity of cleared markets through the safe and sound practices necessary as a Systemically Important Financial Market Utility (SIFMU). Our goal is to provide high quality and efficient clearing, settlement and risk management services for our partner exchanges, clearing firms, and market participants. We achieve this by providing open access and reliable central counterparty services in a cost-effective manner with operational excellence, and by reducing systemic risks, increasing transparency, and providing capital and collateral efficiencies.
You are leading OCC’s transformational change, supported by a three-part strategy focused on: 1) enhancing the firm’s resilience; 2) strengthening its capital structure and; 3) reinvigorating the leadership team. Can you give us an update on these three strategic strands?
Enhancing our resiliency as a SIFMU is critical to our ability to serve market participants, and we are working diligently to reduce systemic risk across the global financial markets. Most notably, we continue to work with and support the efforts of the U.S. Securities and Exchange Commission to improve the regulation of registered clearing entities.
In terms of strengthening our capital structure, OCC’s capital plan reinforces our overarching goal to remain a world-class clearing service for the financial industry. Our capital plan, which has been in effect since September 2015, continues to comply with the domestic and global regulatory requirements on sufficient liquid net assets.
Our management structure has been strengthened in the past year by several key leadership hires, most notably John Davidson, with more than 35 years of experience in global financial services, who joined OCC as President and Chief Operating Officer. In addition to John, we attracted elite talent from prominent organizations, including David Hoag, a technology executive with nearly 25 years of information systems and development experience, in a new role as Chief Information Officer; David Ridgway, a former senior risk management executive with BNY Mellon, who joined OCC as Senior Vice President, Enterprise Risk Management; and Amy McCormick, formerly with the National Futures Association, who was named First Vice President, Financial Risk Management. To help us address the extremely complex objective of cybersecurity, we created a new position dedicated to delivering an ambitious and long-term cybersecurity vision for OCC and named Mark Morrison, formerly with State Street Corporation and several government defense and security agencies, as Chief Security Officer. Mark’s 35 years of experience and leadership are helping OCC integrate information security best practices into our service offerings while lowering systemic risks.
What’s your long-term vision for OCC?
The collective efforts of the OCC team have put our organization in a position to deliver more innovative products and services in the coming years. We remain committed to serving as the foundation for secure markets and in ensuring confidence in the financial markets and the broader economy.
We will continue investing in solutions that enhance our resiliency and fortify our operational effectiveness as an independent risk manager.
We will persist in proactive exploration of new business opportunities that complement our existing products and lower clearing and collateral costs for market participants.
We also will continue to strengthen the relationships we have with our stakeholders as we mature our leadership position in equity derivatives, futures, and securities lending. This stewardship will allow OCC to further contribute to the growth of our industry, and most importantly, lead to the reduction of systemic risk in the global financial system.