The Securities and Exchange Commission is reviewing a proposed rule change by the Options Clearing Corporation (OCC) to enhance its methods for assessing the risks of short-dated options. The OCC plans to adjust how it aligns day-count conventions between option price smoothing and implied volatility scenarios and extend the term structure to better account for options with less than one month to expiration. These changes aim to improve the accuracy of margin and stress testing components, ensuring that the financial risks are well-managed. The rule also outlines the potential impacts on margin requirements and clearing funds, with slight increases expected for accounts with a high concentration of short-dated options.
Simple Explanation
The Options Clearing Corporation plans to improve how they check the risks for some special types of options that expire really soon, like in less than a month, to make sure everything stays safe and fair. This might mean small changes in how much money people have to keep aside to handle these options if things don’t go as planned.