The Securities and Exchange Commission (SEC) has approved a proposal by the Options Clearing Corporation (OCC) to implement a new margin add-on charge aimed at reducing risks from short-dated options trading and intraday activities. This charge will be applied to all clearing member accounts to ensure sufficient financial resources are available to cover credit exposure. The decision comes as a response to the significant increase in trading volume and the associated risks that were not fully addressed under the previous margin system. Despite some industry concerns about potential impacts on competition, the SEC determined that the changes are necessary to safeguard securities and funds while ensuring fair competition.
Simple Explanation
The government has approved a new rule where people who trade lots of options, which are like special contracts, will need to have a little extra money set aside. This is to make sure there's enough money to cover their bets, like having extra backup in case something unexpected happens.