The Securities and Exchange Commission approved a proposed rule change by the Options Clearing Corporation (OCC) to formally document its practices for adjusting margin requirements during periods of high market volatility. OCC uses high-volatility parameter controls to ensure that the margin requirements do not spike unreasonably during volatile times, which helps protect against the possibility of clearing members defaulting on their payments. These adjustments are part of OCC's system for calculating margin requirements, which already includes methods for setting and reviewing both regular and high-volatility parameters, monitoring market conditions, and overseeing the implementation of these controls. The rule change aims to improve clarity and governance without altering OCC's existing practices.
Simple Explanation
When things get very jumpy in the money world, the Securities and Exchange Commission said it's okay for a group called the Options Clearing Corporation to follow special rules to make sure people don't owe too much or get in trouble because of big surprises in the market. This helps keep everything safe and steady, even when things get a bit wild.