As filed with the Securities and Exchange Commission on September 30, 1996
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM S-20
REGISTRATION STATEMENT
Under
The Securities Act of 1933
_______________
THE OPTIONS CLEARING CORPORATION
(Exact name of registrant as specified in its charter)
440 South LaSalle Street
Suite 2400
Chicago, Illinois 60605
312-322-6200
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Wayne P. Luthringshausen, Chairman
The Options Clearing Corporation
440 South LaSalle Street
Suite 2400
Chicago, Illinois 60605
312-322-6200
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
-----------------------------------
Proposed maximum Proposed maximum
Amount to be fee or charge per aggregate fee or Amount of
Title of securities to be registered registered unit charge registration fee
-------------------------------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
20,000,000*
Puts and Calls BOUNDs, DIVS, OWLS and RISKS Contracts $.10** $2,000,000** $689.66
</TABLE>
* Approximately 706,525,047 Puts and Calls (as of August 31, 1996) are
being carried forward from Registration No. 333-3654, with respect to which
a registration fee of $24,362.94 was paid.
** Estimated solely for the purpose of calculating the registration fee
on the basis of aggregate clearing fees charged by registrant in connection
with the issuance of Option contracts.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===========================================================================
Pursuant to Rule 429(b), the Prospectus contained in this Registration
Statement is a Combined Prospectus that also relates to Registration No.
333-3654.
<PAGE>
THE OPTIONS CLEARING CORPORATION
_______________
CROSS REFERENCE SHEET
_______________
Pursuant to Rule 404(c) Showing Location in the Prospectus of
Information Required by Items of Form S-20
Item Number and Caption Prospectus Section
------------------------- --------------------
Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus . . Cover Page
Description of Registrant . . The Options Clearing
Corporation
Description of Securities to Description of Options
be Registered . . . . . . . .
<PAGE>
PROSPECTUS
The Options Clearing Corporation
PUTS and CALLS,
BOUNDs
and
DIVS, OWLS and RISKS
This prospectus pertains to put and call options ("Puts" and
"Calls"), BOUNDs, and DIVS, OWLS and RISKS (collectively, "DORs")
issued by The Options Clearing Corporation ("OCC"). (Puts and Calls,
BOUNDs and DORs are collectively referred to as "Options.")
Certain types of transactions in options involve a high degree of
risk and are not suitable for many investors. Investors should
understand the nature and extent of their rights and obligations and
be aware of the risks involved. An options disclosure document
containing a description of the risks of options transactions is
required, under U.S. Laws, to be furnished to options investors. That
document is entitled CHARACTERISTICS AND RISKS OF STANDARDIZED
OPTIONS. Investors may obtain it from their brokers. That document is
not a part of this prospectus, and it is not incorporated herein by
reference or otherwise.
Financial statements of OCC and certain additional information
required to be contained in Part II of the registration statement of
which this prospectus forms a part, other than exhibits, may be
obtained without charge upon request from OCC. The exhibits required
to be contained in Part II may be inspected at the offices of OCC or
obtained from OCC or from the Securities and Exchange Commission
("SEC") upon payment of the applicable fee.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
---------------------------
The date of this prospectus is October __, 1996.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS ON BEHALF OF OCC OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
OCC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OPTIONS IN
ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER. THE DELIVERY OF THIS PROSPECTUS DOES NOT IMPLY THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
Certain Options issued by OCC and traded on U.S. exchanges may
also be traded on non-U.S. exchanges. Options issued by OCC that are
traded on non-U.S. exchanges are identical to Options having the same
terms that are traded on U.S. exchanges. A United States investor
desiring to effect transactions in OCC-issued Options on non-U.S.
exchanges generally can do so through a United States broker who is a
member of the non-U.S. exchange or who maintains an affiliation or
correspondent relationship with a member of that exchange. Investors
should bear in mind that non-U.S. exchanges and their non-U.S. member
brokers are not subject to regulation by the SEC, are not generally
subject to the requirements of the securities or other laws of the
United States, and may not be subject to the jurisdiction of courts in
the United States.
"BOUNDs" is a service mark of the American Stock Exchange, Inc.
"DIVS," "OWLS" and "RISKS" are service marks of Americus Stock Process
Corp.
THE OPTIONS CLEARING CORPORATION
OCC was incorporated in Delaware in 1972. OCC is owned equally by
the U.S. exchanges that provide markets in Options. As of the date of
this prospectus, those exchanges are the American Stock Exchange,
Inc., the Chicago Board Options Exchange, Incorporated, the New York
Stock Exchange, Inc., the Pacific Stock Exchange Incorporated, and the
Philadelphia Stock Exchange, Inc.
OCC's principal business consists of issuing Options, providing
facilities for the clearance and settlement of transactions in
Options, and providing incidental services to its Clearing Members and
to the markets on which Options are traded. (Clearing Members are
organizations generally securities firms that assume responsibility to
OCC for the settlement of transactions in Options and the performance
of the obligations undertaken by writers of Options.)
OCC is managed by a board of directors consisting of nine
directors who represent Clearing Members, one director representing
each of the exchanges named above, one public director, and the chief
executive officer of OCC.
The principal executive offices of OCC are located at 440 South
LaSalle Street, Chicago, Illinois 60605, telephone (312) 322-6200.
<PAGE>
DESCRIPTION OF OPTIONS
GENERAL
The Options covered by this prospectus are Puts and Calls,
BOUNDs, and DORs issued by OCC. As of the date of this prospectus,
Options are traded or approved for trading on common stocks and
certain other equity securities, including preferred stocks, publicly
traded limited partnership interests, and American Depository
Receipts, all of which are included in the term "stock" as used in
this prospectus. Puts and Calls are also currently traded or approved
for trading on United States Treasury bonds, notes, and bills
(sometimes referred to below as "debt instruments"), on foreign
currencies, on stock indexes, and on the yields of certain Treasury
securities. Stock, debt instruments, currencies, and indexes on which
Options are traded are referred to as "underlying interests." Options
may be traded on other underlying interests in the future.
This prospectus contains a general description of the terms of
Puts and Calls, BOUNDs and DORs. OCC has authority under its by-laws
and rules to adjust the terms of outstanding Options under certain
circumstances, and to suspend settlement obligations or specify an
alternative performance in unusual situations.
PUTS AND CALLS
Puts and Calls provide the right either to buy or to sell a
specified amount of a particular underlying interest at a fixed or
determinable exercise price by exercising the Option before its
specified expiration time. An Option that gives a right to buy is a
Call, and an Option that gives a right to sell is a Put.
Some Puts and Calls call for the delivery of the underlying
interest against payment of the exercise price. When an Option of that
type is exercised, subject to limitations that may be imposed by OCC
pursuant to its by-laws and rules, the exercising holder sells (in the
case of a Put) or buys (in the case of a Call) the number of shares or
other units of the underlying interest covered by the Option at the
exercise price.
Other Puts and Calls are "cash-settled." When a cash-settled Put
or Call is exercised, the holder is entitled to receive a cash
"exercise settlement amount." The exercise settlement amount is equal
to the product of (i) the difference between the exercise price of the
Option and the settlement value of the underlying interest as of a
specified date and time (or, in the case of a capped Option that is
automatically exercised, the cap price) and (ii) the number of units
of the underlying interest covered by the Option, or, in the case of
Options on indexes or yields, a fixed "multiplier."
Certain Puts and Calls may provide for payments or deliveries
prior to exercise, such as dividend equivalent payments.
There are three "styles" of Puts and Calls American, European,
and capped. Subject to certain limitations prescribed in the by-laws
and rules of OCC, an American-style Put or Call may be exercised at
<PAGE>
any time prior to expiration. A European-style Put or Call or a capped
Put or Call may be exercised only at expiration. In addition, a capped
Put or Call will be automatically exercised if the value of the
underlying interest on any trading day (determined at a specified time
of day) equals or exceeds (in the case of a Call), or equals or is
less than (in the case of a Put), the pre-established "cap price."
Certain American-style and European-style Puts and Calls will be
automatically exercised at expiration if they are in the money or in
the money by a minimum amount. A Put or Call holder may determine from
his broker whether and under what circumstances the Option will be
automatically exercised; and, if the Option will not be automatically
exercised, what steps the holder must take in order to exercise.
BOUNDs
BOUNDs are "Buy-Write Options UNitary Derivatives" issued by OCC.
The purchase of a BOUND is intended to be economically similar to the
execution of a "buy-write" transaction, which would involve the
simultaneous writing of a European-style Call and the purchase of the
underlying stock. Unlike an actual buy-write transaction, however,
the purchase of a BOUND is effected in a single transaction. As of
the date of this prospectus, BOUNDs are traded or approved for trading
only on common stocks. BOUNDs may be traded on other underlying
interests in the future.
Unlike Puts and Calls, BOUNDs do not involve the concepts of
"exercise" and "assignment." Rather, if on the last day of trading
before expiration the underlying stock closes at or below the strike
price, a holder is entitled to receive, and a writer is obligated to
deliver, the number of shares of the underlying stock covered by the
BOUND. If on the last day of trading the underlying stock closes
above the strike price, a BOUND holder is entitled to receive, and a
writer is obligated to make, a cash payment equal to the strike price
multiplied by the number of shares covered by the BOUND. This is the
same economic result that accrues to a covered Call writer who
maintains the position to the expiration of the Call.
During the life of a BOUND, a BOUND writer is obligated to pay or
deliver, and a holder is entitled to receive, "dividend equivalent"
payments reflecting regular cash dividends and certain other
distributions with respect to the underlying stock. No voting rights
are created or transferred by a BOUND.
DORs
DORs represent a theoretical division of an equity security into
three components: DIVS, OWLS and RISKS. DIVS reflect regular cash
dividends and certain other distributions on the underlying security
during the DIVS term. OWLS reflect the value of the underlying stock
at expiration, but not in excess of the strike price. RISKS reflect
any appreciation of the underlying stock at expiration in excess of
the strike price.
Like BOUNDs, DORs do not involve the concepts of "exercise" and
"assignment." If on the last day of trading before expiration the
underlying stock closes at or below the strike price, a holder of an
<PAGE>
OWLS is entitled to receive, and a writer of an OWLS is obligated to
deliver, the number of shares of the underlying stock covered by the
OWLS. A holder of a RISKS would receive nothing. If instead the
underlying stock closes above the strike price, an OWLS holder would
be entitled to receive, and an OWLS writer would be obligated to
deliver, shares of the underlying stock with an aggregate value, based
on the closing price, equal to the strike price multiplied by the
number of shares covered by the OWLS. In that event, a RISKS holder
would be entitled to receive, and a RISKS writer would be obligated to
deliver, shares of the underlying stock with an aggregate value, based
on the closing price, equal to the excess of the closing price over
the strike price multiplied by the number of shares covered by the
RISKS. Rights to fractional shares are settled in cash. During the
term of a DIVS, a DIVS writer is obligated to pay or deliver, and a
holder is entitled to receive, a dividend equivalent reflecting
regular cash dividends and certain other distributions that are made.
As with BOUNDs, no voting rights are created or transferred by DORs.
CERTIFICATELESS TRADING
No certificates are issued to evidence Options. Investors look to
the confirmations and statements that they receive from their brokers
to confirm their positions as holders or writers of Options.
OBLIGATIONS OF OCC
The obligations of OCC to holders and writers of Options are
prescribed in its by-laws and rules, copies of which may be obtained
as described under "Additional Information" below. The following is a
brief summary of some, but not all, of those obligations, and is
qualified in its entirety by the provisions of the by-laws and rules
themselves.
1. Acceptance and Rejection of Transactions
- --------------------------------------------
If a market reports an Option transaction to OCC on a timely
basis, OCC ordinarily becomes obligated to "accept" the
transaction that is, to issue the Option if the buyer was engaging in
an opening purchase transaction or to cancel a pre-existing writer's
position if the buyer was engaging in a closing purchase
transaction on the following business day. When OCC issues Options, it
assumes the obligations described below under "Exercise and
Settlement." OCC has no obligation with respect to any transaction in
Options unless and until the transaction is reported to OCC by the
responsible market. In the case of foreign currency Options premiums
denominated in a currency other than U.S. dollars, OCC reserves the
right to reject even properly reported transactions if the Clearing
Member representing the buyer fails to meet, when due, its total net
premium obligations to OCC in that currency in the account in which
the transaction was effected. If a transaction is rejected for
nonpayment of premiums, the writer may have remedies under the rules
of the market where the transaction took place.
<PAGE>
2. Exercise and Settlement
- ---------------------------
When OCC issues a Put or Call, it becomes obligated to purchase
(in the case of a Put) or sell (in the case of a Call) the underlying
interest for the stated exercise price (or, in the case of a
cash-settled Option, to pay the exercise settlement amount) if the
Option is exercised. When OCC issues a BOUND or DOR, it becomes
obligated to make dividend equivalent payments during the term of the
Option and to deliver underlying stock or cash (in the case of a
BOUND) or underlying stock (in the case of an OWLS or RISKS) at
expiration. The procedures whereby OCC discharges these obligations
are prescribed in the by-laws and rules of OCC, and are summarized
below.
After a Put or Call is exercised, OCC assigns the exercise to a
Clearing Member whose account with OCC reflects the writing of an
Option of the same series as the exercised Option. The assigned
Clearing Member then becomes obligated to perform OCC's obligations on
its behalf that is, to purchase the underlying interest (in the case
of an exercised Put) or to sell the underlying interest (in the case
of an exercised Call) for the specified exercise price, or to pay the
exercise settlement amount in the case of a cash-settled Option.
During the term of a BOUND or DIVS, each Clearing Member whose
account with OCC reflects the writing of a BOUND or DIVS is obligated
to make dividend equivalent payments to OCC. OCC, in turn, is
obligated to make dividend equivalent payments to Clearing Members
whose accounts reflect the purchase of BOUNDs or DIVS. Upon
expiration, each Clearing Member whose account with OCC reflects the
writing of a BOUND, OWLS, or RISKS, is obligated to perform OCC s
settlement obligation on its behalf that is, to deliver underlying
stock or cash (in the case of a BOUND) or underlying stock (in the
case of an OWLS or RISKS).
While an American-style Put or Call normally can be exercised at
any time prior to its expiration, and a European-style or capped-style
Put or Call Option ordinarily can be exercised at expiration, both OCC
and the Put and Call Options markets have the authority to restrict
the exercise of Puts and Calls, at certain times in specified
circumstances. It also is possible that a court, the SEC or another
regulatory agency having jurisdiction would impose a restriction which
would have the effect of restricting the exercise of a Put or Call or
the settlement of such exercises. If a restriction on exercise is
imposed at a time when trading in the Option has also been halted,
holders of that Option may be locked into their positions until either
the restriction or the trading halt has been lifted. Certain
restrictions could prevent exercise of a Put or Call through
expiration, in which event the Option would expire worthless.
A. STOCKS. Settlement obligations among Clearing Members
calling for the delivery of stocks are discharged through stock
clearing corporations. Like OCC, these clearing corporations are
registered with the SEC as clearing agencies, and their rules are
subject to SEC review. OCC reports delivery obligations and
<PAGE>
entitlements to the stock clearing corporation(s) designated for
settlement purposes by the affected Clearing Members (or their
agents). Each Clearing Member then looks to its own clearing
corporation for settlement, and receives delivery of the underlying
stock or any related payment (e.g., payment of the exercise price in
the case of a Put or Call exercise), in accordance with the rules of
that clearing corporation. The clearing corporation in turn looks to
the other Clearing Member (if both Clearing Members designated the
same clearing corporation), or to the stock clearing corporation
designated by the other Clearing Member, for an offsetting delivery or
payment. When a delivery obligation is submitted to one or more stock
clearing corporations for settlement and not rejected by them, the
responsibility for completing the settlement passes from OCC to the
stock clearing corporation(s). This occurs on or prior to the
settlement date, at a time determined by agreement between OCC and the
stock clearing corporations. After that time, OCC has no further
responsibility to its Clearing Members for the delivery obligation or
any related payments. Instead, rights and responsibilities run between
the affected Clearing Members and their respective stock clearing
corporations. In unusual circumstances, OCC may require that
particular settlements (or settlements generally) be made directly
between the affected Clearing Members, in which case OCC remains
obligated until settlement is made with the Clearing Member
representing the holder of the exercised Put or Call or the expired
BOUND, OWL, or RISK, as the case may be.
B. CASH SETTLEMENTS. Exercises of cash-settled Options (and any
cash payments required on expiration of BOUNDS, OWLS, and RISKS) are
settled through OCC. The settlement amount is credited to the
receiving Clearing Member's settlement account with OCC and charged to
the account of the Paying Clearing Member. OCC's obligations are
discharged when the settlement amount is credited to the account of
the receiving Clearing Member. In the future, exchanges may introduce
Options with settlement amounts payable in currencies other than U.S.
dollars. OCC and Clearing Members would pay and receive such amounts
through banking channels that make the relevant currency available to
the recipient in the country of origin.
Cash settlement amounts are calculated based upon values or
prices for the underlying interests determined in accordance with
procedures specified in the by-laws and rules of OCC or in the rules
of the exchanges on which the Options are traded. Special
discretionary procedures for determining settlement amounts may apply
when values or prices of the underlying interests are unreported or
otherwise unavailable or have been affected by trading halts or other
unusual conditions.
C. DEBT INSTRUMENTS. Exercises of Puts and Calls requiring
delivery of debt instruments are settled directly between the
exercising and the assigned Clearing Members or their agents. OCC's
obligations are discharged when the aggregate exercise price in the
case of a Put, or the deliverable underlying debt instrument in the
case of a Call, is delivered to the exercising Clearing Member.
Exercises of Puts and Calls requiring delivery of debt instruments may
<PAGE>
in the future be settled through clearing corporations under
arrangements similar to those described in paragraph A above.
D. FOREIGN CURRENCIES. Exercises of Puts and Calls requiring
delivery of foreign currencies are settled through OCC. Currencies are
delivered to OCC, and redelivered by OCC to the receiving Clearing
Members, through banking channels that make the underlying currency
available to the recipient in the country of origin. Exercise prices
are paid to OCC, and credited by OCC to the accounts of the delivering
Clearing Members, either through OCC's regular cash settlement system
or through the banking channels used for delivery of the underlying
currencies. Certain foreign currency Options have exercise prices that
are denominated in currencies other than U.S. dollars (e.g., Options
to purchase British pounds at exercise prices denominated in Japanese
yen). Payment of exercise prices denominated in foreign currencies and
delivery of the underlying currencies are effected through banking
arrangements established for that purpose by OCC in the country of
origin of the currency being paid or delivered.
Clearing Members may arrange in some cases for delivery of
underlying foreign currency and payment of exercise prices to be made
directly between a customer's bank account and an OCC correspondent
bank. In some cases, OCC may act as an agent for The Intermarket
Clearing Corporation ("ICC"), a subsidiary of OCC, in making foreign
currency settlements with Clearing Members, and settlements between
OCC and ICC may be netted. ICC's settlement procedures are the same as
OCC's. OCC's obligations to the exercising Clearing Member are
discharged when the aggregate exercise price in the case of a put, or
the underlying currency in the case of a call, is delivered to the
Clearing Member. However, OCC and ICC in the future may adopt rules
providing that their obligations will be discharged at the time the
foreign currency or aggregate exercise price, as the case may be, is
transferred to an OCC correspondent bank that is obligated to complete
the settlement.
E. NET SETTLEMENT. If a Clearing Member is obligated both to
purchase and to sell a particular underlying interest for the same
exercise price on the same exercise settlement date, or, in the case
of BOUNDs and DORs, deliver and receive the same underlying interest,
OCC may offset the Clearing Member's obligations against each other,
so that only the net obligation will have to be settled as described
above. Where an exercise is settled by offset, OCC has no further
responsibility in respect of that exercise. OCC may net a Clearing
Member's obligations with respect to Puts and Calls on foreign
currencies even where the purchase and sale are at different exercise
prices. In that event, the difference in exercise prices is settled in
cash between OCC and the Clearing Member.
F. SETTLEMENT WITH CUSTOMERS. The foregoing describes the
system for settlements among OCC and its Clearing Members. Clearing
Members settle independently with their customers (or with brokers
representing customers). OCC has no responsibility for settlements
between a Clearing Member or broker and its customer or for the funds
<PAGE>
or securities of a customer that are held by a Clearing Member or
broker.
G. SHORTAGES OF UNDERLYING INTERESTS. In certain circumstances
involving shortages of underlying securities or currencies or in other
unusual situations, OCC has the power to impose special settlement
procedures. These special procedures may involve delaying settlements
or fixing of cash settlement prices in lieu of delivery of the
underlying security or currency. In such circumstances OCC also may
prohibit the exercise of Puts by holders who would be unable to
deliver the underlying security or currency on the exercise settlement
date. In the event of a shortage of an underlying debt instrument, OCC
may permit the delivery of other, generally comparable securities, and
may adjust the exercise prices of affected Puts and Calls to
compensate for such substitute deliveries. While these special
settlement procedures currently only apply to Puts and Calls, OCC is
considering adopting comparable procedures for BOUNDs and DORs, both
with respect to settlement obligations and non-cash dividend
equivalent payments.
3. Remedies
- -------------
A. GENERAL RULE. If a Clearing Member is suspended by OCC, with
the result that a settlement will not occur in the ordinary course, or
if a Clearing Member fails to make a settlement that was to have been
made directly with another Clearing Member or an exercise of foreign
currency Options, OCC may require that any underlying interest be
bought in or sold out by the non-defaulting party. Losses on such
transactions constitute senior claims against certain assets of the
defaulting Clearing Member in the possession of OCC, and are
compensable out of OCC's Clearing Funds (see "The Back-Up System") to
the extent that those assets are insufficient. In addition, losses
sustained by the holder of an Option would constitute claims against
the general assets of OCC.
B. SETTLEMENTS THROUGH STOCK CLEARING CORPORATIONS. After
responsibility for completing a settlement passes to one or more stock
clearing corporations as described above, the affected Clearing
Members have no further rights against OCC or any assets in its
possession.
C. CASH-SETTLED PRODUCTS. If a Clearing Member that is
obligated to make a cash settlement payment fails to pay the
settlement amount to OCC, OCC is nevertheless obligated to settle with
all Clearing Members that are entitled to receive cash settlement
payments from OCC.
D. TENDER OFFERS, ETC. If a Clearing Member fails to make
timely delivery of an underlying security on the settlement date, and
as a result another party is unable to deliver the security in
sufficient time to participate in a tender offer, exchange offer, or
other transaction, the Clearing Member that failed to make timely
delivery may be held liable for any loss sustained by the other party.
<PAGE>
Similarly, a Clearing Member may seek to hold its customer liable for
losses sustained due to the customer's failure to make timely
delivery.
4. The Back-Up System
- -----------------------
OCC's settlement procedures are designed so that for every
outstanding Option there will be a writer and a Clearing Member that
is or that represents the writer of an Option of the same series who
has undertaken to perform OCC's settlement obligations. As a result,
no matter how many Options of a given series may be outstanding at any
time, there will always be a group of writers of Options of the same
series who, in the aggregate, have undertaken to perform OCC's
settlement obligations with respect to such Options.
A customer who writes an Option is contractually bound to its
broker to perform in accordance with the terms of the Option. These
contractual obligations are secured by the securities or other margin
that the customer is required to deposit with its broker.
Clearing Members are contractually bound to perform their
obligations to OCC regardless of whether their customers perform.
Standing behind a Clearing Member's obligations are the Clearing
Member's net capital, the Clearing Member's margin deposits with OCC,
OCC's lien and setoff rights with respect to certain of the Clearing
Member's assets, and the Clearing Funds.
A. THE CLEARING MEMBER'S NET CAPITAL. Every U.S. Clearing
Member must have an initial net capital (as defined in SEC rules) of
$1 million or more, depending on the nature and magnitude of its
assets and obligations. A Clearing Member's net capital may fall to
less than that amount as a result of transactions in the regular
course of business, but a Clearing Member may not engage in or clear
any opening transaction if its net capital falls below $750,000 or a
greater amount determined in accordance with the rules of OCC. A
Clearing Member's net capital, however, would be subject to claims by
creditors other than OCC. Certain non-U.S. Clearing Members may elect
to comply with alternative financial requirements. These alternative
requirements may be more or less stringent than those applicable to
U.S. Clearing Members.
OCC obtains certain financial reports from each Clearing Member
on a monthly basis, and may require more frequent reports. In
appropriate cases, OCC may impose restrictions on a Clearing Member's
operations, such as a prohibition on opening transactions or a
requirement that the Clearing Member reduce or eliminate certain
writing positions.
When Options issued by OCC are traded on non-U.S. exchanges,
clearinghouses associated with those exchanges ("Associate
Clearinghouses") may maintain Options accounts with OCC. The financial
and reporting requirements applicable to Associate Clearinghouses, as
well as OCC's ability to impose restrictions on positions carried by
<PAGE>
Associate Clearinghouses, are subject to agreements between OCC and
the Associate Clearinghouses.
B. THE CLEARING MEMBER'S MARGIN DEPOSITS. Subject to certain
exceptions described below, each Clearing Member is required to
deposit and maintain margin with OCC with respect to each Option for
which it represents the writer. Several different forms of margin are
permitted, including cash, marketable securities and bank letters of
credit, and certain margin assets may be denominated in foreign
currencies. OCC may in the future accept margin deposits in still
other forms.
The amount of margin is specified by OCC in accordance with its
rules, and may be reduced to the extent a Clearing Member is permitted
or required to pledge to OCC certain Options positions carried in
their accounts with OCC. OCC may require any Clearing Member to
deposit higher margins at any time in the event it deems such action
necessary and appropriate in the circumstances to protect the
interests of other Clearing Members, OCC or the public. OCC may waive
a margin deposit that would otherwise be required to be made if it
determines that the waiver is advisable in the public interest and for
the protection of investors and is consistent with maintaining OCC s
financial integrity.
OCC has implemented "cross-margining" arrangements between itself
and various commodity clearing organizations. Under these
arrangements, Clearing Members that are also members of one or more of
the participating commodity clearing organizations, or that have
affiliates that are members of such clearing organizations, can pledge
positions in certain Options to secure obligations in respect of
positions in related futures and futures options and vice versa. The
obligations of one or more participating commodity clearing
organizations are substituted in whole or in part for the Clearing
Member's obligations to deposit margin in respect of cross-margined
Option writing positions. Margin deposited in satisfaction of any
remaining margin requirement in respect of cross-margined Options,
futures and futures options positions is held jointly for the benefit
of OCC and the participating commodity clearing organizations.
OCC also functions as an intermediary in stock lending and
borrowing transactions among participating Clearing Members. Positions
representing the rights and obligations of the borrowing or lending
Clearing Member to OCC are carried in the Clearing Member's accounts
at OCC. A Clearing Member's margin requirement reflects the increase
or decrease in risk to OCC associated with the inclusion of those
positions in an account.
Margin deposited by a Clearing Member may be applied only to the
obligations of that Clearing Member and its designated affiliates and
may not be applied to the obligations of other Clearing Members or the
obligations of OCC itself.
In lieu of depositing margin with respect to writing positions in
certain Options, a Clearing Member may deposit the underlying
<PAGE>
interest, or, in the case of index Options, a combination of cash and
marketable securities. In lieu of depositing margin with respect to
Puts on common stocks, a Clearing Member may deposit Treasury bills in
an amount at least equal to the exercise price. In the future OCC may
also accept cash and/or short-term government securities other than
Treasury bills as margin for Puts on common stocks. Cash and
securities deposited in lieu of margin must be placed with a
depository satisfactory to OCC under agreements requiring their
delivery or liquidation and payment of the proceeds in the event that
the writer is required to perform its settlement obligations with
respect to the position covered by the deposit.
OCC has no reason to believe that any depository holding margin
deposits or deposits made in lieu of margin will not deliver them in
accordance with the terms of its agreement with OCC, or that any bank
will not honor letters of credit issued to OCC for margin purposes.
However, there can be no assurance that a bank or other depository
will not delay or default in performing these or other obligations to
OCC, or be restrained by court order or regulatory action from
performing these obligations, and such delays or defaults could
adversely affect OCC's ability to perform its obligations as the
issuer of Options.
C. OCC'S LIEN AND SETOFF RIGHTS. OCC has a lien on, and setoff
right against certain securities, margin deposits, funds and other
assets maintained in a Clearing Members accounts with OCC. If a
Clearing Member does not perform its obligations to OCC, these assets
may be sold or converted to cash and the proceeds applied to the
performance of the Clearing Member's obligations to OCC (such
application being limited, in certain cases, to obligations arising
from the same account in which the assets were held).
D. THE CLEARING FUNDS. OCC's rules provide for Clearing Funds
composed of mandatory deposits by Clearing Members. These funds are
for the protection of OCC and are not general indemnity funds
available to other persons, such as customers of Clearing Members. The
amounts of these Funds vary over time, based on formulas designed to
reflect OCC's risk exposure. The proportionate contribution of each
Clearing Member takes into account the size of the Clearing Member's
positions relative to the positions of all Clearing Members. All
Clearing Fund deposits must be made in cash or by the deposit of
government securities having a maturity of ten years or less, except
that OCC may agree with an Associate Clearinghouse that its Clearing
Fund deposit may be made in different or additional forms.
If a Clearing Member fails to discharge any obligation to OCC in
connection with Options or stock loan/borrow transactions, its
deposits to the Clearing Funds may be applied to the discharge of that
obligation. If a Clearing Member's obligation to OCC exceeds its
deposits to the Clearing Funds, the amount of the deficiency may be
charged by OCC on a predetermined basis against all other Clearing
Members' deposits to the Clearing Funds. OCC also may charge to the
Clearing Funds, on the same basis, certain other losses resulting from
its business as a clearing agency and issuer of securities. Whenever
<PAGE>
amounts are paid out of Clearing Funds as a result of such a charge,
Clearing Members are required promptly to make good any deficiency in
their deposits resulting from such payment, except that a Clearing
Member is not required to pay more than an additional 100% of the
amount of its prescribed deposits to a Clearing Fund if it ceases to
clear Transactions in Options of the types for which the applicable
Clearing Fund was established and promptly closes out or transfers
all of its positions in such Options.
Under certain limited circumstances, OCC may borrow against the
Clearing Funds on a short term basis to meet obligations arising out
of the suspension of a Clearing Member and related actions taken by
OCC or to cover losses resulting from bank or clearing organization
failures.
OCC will also have available its own assets in the event that the
Clearing Funds are insufficient. However, these assets are small
relative to the magnitude of OCC's potential obligations.
ADDITIONAL INFORMATION
Certain additional information, which is neither part of this
prospectus nor incorporated herein in any way, can be obtained as
described below:
1. The document entitled CHARACTERISTICS AND RISKS OF
STANDARDIZED OPTIONS referred to on the cover page of this
prospectus may be obtained by U.S. customers from their
brokers.
2. The by-laws and rules of OCC, as the same may be amended
from time to time, are filed with the SEC under the
Securities Exchange Act of 1934. These filings may be
obtained from the SEC upon payment of the fees prescribed by
the SEC.
3. The constitutional provisions, rules, regulations and other
requirements of the U.S. exchanges that are authorized to
provide markets in Options, and of the stock clearing
corporations through which stock based Options are settled,
are required to be filed with the SEC. These filings may be
obtained from the SEC upon payment of the fees prescribed by
the SEC. Copies of corresponding documents relating to
non-U.S. exchanges that provide markets in Options may be
obtained in accordance with the rules applicable to those
exchanges. OCC is not responsible for the content,
interpretation, sufficiency or enforcement of such
provisions, rules, regulations, other requirements or
documents.
4. The financial statements of OCC and certain other
information may be obtained as described on the cover page
of this prospectus.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 4. DIRECTORS AND EXECUTIVE OFFICERS.
OCC's by-laws provide for a board of directors consisting of nine
Member Directors elected by Clearing Members, one Exchange Director
designated by each of the self-regulatory organizations authorized to
provide a market in Options, one Public Director who is not affiliated
with any national securities exchange or national securities
association or any broker or dealer in securities, and one Management
Director who is the chief executive officer of OCC. The nine Member
Directors, who are selected by a Nominating Committee (or by vote of
the Clearing Members where nominees have been proposed by petition),
are divided into three classes whose terms are staggered so that three
directors are elected each year. The Exchange Directors are elected
for a term of one year. The Public Director (who is nominated by the
Chairman of the Board with the approval of the Board of Directors) is
elected for a term of two years. The Nominating Committee is composed
of six representatives of Clearing Members who are elected in the same
manner as Member Directors. Terms expire in April of each year.
As of the effective date of this Registration Statement, the
directors and executive officers of OCC are as follows:
DIRECTORS
WAYNE P. LUTHRINGSHAUSEN, age 52, has been the Management
Director of OCC since 1973. He has served as Chairman of the Board
and Chief Executive Officer of OCC for over five years. His present
term as a director of OCC expires in April, 1997.
MARC L. BERMAN, age 50, has been a Member Director of OCC since
1992. Mr. Berman has been the Vice President and Managing Director of
SBC Derivatives, Inc., a Clearing Member of OCC, and Managing
Director/Legal Affairs of Swiss Bank Corporation, the parent of SBC
Derivatives, Inc., since 1992. Mr. Berman was General Counsel of
O'Connor & Associates from 1986 until 1992 and was a partner of that
firm from 1989 until its assets were acquired by SBC Capital Markets
Inc. in January, 1995. His present term as a director of OCC expires
in April, 1998.
W. GORDON BINNS, JR., age 67, has been a Public Director of OCC
since 1993. Mr. Binns has been a member of the Investment Advisory
Committee of the Virginia Retirement System (and its chairman until
June 30, 1996) since 1994. He was President and Chief Executive
Officer of General Motors Investment Management Corporation from 1990
until 1994, and was Vice President of General Motors and its Chief
Investment Funds Officer from 1986 until 1994. Mr. Binns serves as a
director of Equity Fund of Latin America, Commonwealth Equity Fund,
the Chicago Mercantile Exchange, and Taubman Centers, Inc.. Mr. Binns
<PAGE>
also serves on several non-profit boards. His present term as a
director of OCC expires in April, 1997.
WILLIAM F. DEVIN, age 57, has been a Member Director of OCC
since 1994. Mr. Devin has been Executive Vice President of Fidelity
Capital Markets, a division of National Financial Services
Corporation, a securities firm and a Clearing Member of OCC, since
1986. His present term as a director expires in April, 1997.
DOUGLAS J. ENGMANN, age 49, has been a Member Director of OCC
since 1992. Mr. Engmann has been President and co-founder of Sage
Clearing L.P., a securities firm and a Clearing Member of OCC since
1980. His present term as a director of OCC expires in April, 1999.
FREDDY ENRIQUEZ, age 55, has been a Member Director of OCC since
April, 1995. Mr. Enriquez has been the First Vice President and
Director of Global Equity Operations for Merrill Lynch Pierce Fenner &
Smith, Inc., a securities firm and a Clearing Member of OCC, since
1992. From 1982 to 1992, Mr. Enriquez was the Vice President of
Global Equity Operations for Merrill Lynch Pierce Fenner & Smith, Inc.
His present term as a director of OCC expires in April, 1998.
NICHOLAS A. GIORDANO, age 53, has been an Exchange Director of
OCC, representing the Philadelphia Stock Exchange, Inc., since 1978.
Mr. Giordano has been President and Chief Executive Officer of that
exchange since 1981. His present term as a director of OCC expires in
April, 1997.
ALFRED J. GOLDEN, age 62, has been a Member Director of OCC since
1992. Mr. Golden has been Executive Vice President and Director of
Operations of Dean Witter Reynolds, Inc., a securities firm and a
Clearing Member of OCC, since 1985. Mr. Golden also serves as a
director of the National Securities Clearing Corporation. His present
term as a director of OCC expires in April, 1997.
ROBERT M. GREBER, age 58, has been an Exchange Director of OCC,
representing the Pacific Stock Exchange, Incorporated, since April,
1996. Mr. Greber has been Chairman and Chief Executive Officer of
that exchange since January, 1996. Mr. Greber was President and Chief
Operating Officer for that exchange from 1992 to 1996, and was the
Executive Vice President for Marketing and Strategic Planning for that
exchange from 1990 to 1992. His present term as a director of OCC
expires in April, 1997.
M. BLAIR HULL, age 54, has been a Member Director of OCC since
1993. Mr. Hull has been the Managing Principal, and was the founder,
of Hull Trading Company, LLC, a securities firm and a Clearing Member
of OCC, since 1985. His present term as a director of OCC expires in
April, 1997.
EDWARD J. JOYCE, age 44, has been an Exchange Director of OCC,
representing the Chicago Board Options Exchange, Incorporated, since
1991. He has been an Executive Vice President-Trading Operations of
<PAGE>
that exchange since 1987. His present term as a director of OCC
expires in April, 1997.
DAVID KRELL, age 50, has been an Exchange Director of OCC,
representing the New York Stock Exchange, Inc., since November, 1995.
Mr. Krell has been a Vice President of that Exchange since 1984. His
present term expires in April, 1997.
WILLIAM A. ROGERS, age 57, has been a Member Director of OCC
since April, 1994. Mr. Rogers has been the Chief Executive Officer of
Wayne Hummer Investments, LLC, a securities firm and a Clearing Member
of OCC, for over five years. Mr. Rogers also serves as a director of
the National Association of Securities Dealers, Inc. His present term
as a director of OCC expires in April, 1997.
HARVEY SILVERMAN, age 55, has been the Vice Chairman of the Board
of OCC since 1994 and a Member Director of OCC since 1993. Mr.
Silverman has been the Senior Managing Director and Chief Operations
Officer of Spear, Leeds & Kellogg, a securities firm and a Clearing
Member of OCC, since 1988. Mr. Silverman also serves as a member of
the Board of Governors of the American Stock Exchange. His present
term as a director of OCC expires in April, 1999.
JOSEPH STEFANELLI, age 57, has been an Exchange Director of OCC,
representing the American Stock Exchange, Inc., since December, 1995.
Mr. Stefanelli has been Executive Vice President of that exchange
since 1993, and prior to that time had been a Senior Vice President of
that exchange. His present term as a director of OCC expires in
April, 1997.
MELVIN B. TAUB, age 52, has been a Member Director of OCC since
April, 1996. Mr. Taub has been a Senior Executive Vice President and
Director of Securities Operations and Information Services at Smith
Barney, Inc., a securities firm and a Clearing Member of OCC, since
1991. Mr. Taub also serves as a Director of the National Securities
Clearing Corporation and is a member of the NASDAQ Industry Advisory
Committee. His present term as a director of OCC expires in April,
1998.
NON-DIRECTOR EXECUTIVE OFFICERS
PAUL G. STEVENS, JR., age 52, has been President and Chief
Operating Officer of OCC since 1989, and has been the Treasurer and
Chief Financial Officer of OCC since 1994.
GEORGE S. HENDER, age 54, has been Senior Executive Vice
President of OCC since 1990 and was General Counsel of OCC from 1992
until 1994.
RALPH E. PFAFF, age 58, has been Executive Vice President and
Corporate Information Officer of OCC since 1984.
NICHOLAS J. FERGADIS, age 58, has been a Senior Vice President of
OCC since 1982 and Chief Administrative Officer of OCC since 1986.
<PAGE>
ITEM 5. LEGAL PROCEEDINGS.
None.
ITEM 6. LEGAL OPINIONS AND EXPERTS.
The opinion of Schiff Hardin & Waite, Chicago, Illinois, general
counsel to OCC, as to the legality of the securities being registered
is filed as an exhibit to this Registration Statement.
The consolidated Financial Statements of the Company as of
December 31, 1995 and 1994, and for the years then ended, included in
this Registration Statement have been audited by Deloitte and Touche
LLP, Independent Auditors, as dated in their report appearing herein,
and are included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
ITEM 7. FINANCIAL STATEMENTS.
There are set forth below the audited statements of consolidated
financial condition of OCC and subsidiaries as of December 31, 1995
and 1994, and the related statemetns of consolidated income and
retained earnings for each of the three years in the period ended
December 31, 1995.
ITEM 8. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes to file a
post-Effective Amendment not later than 120 days after the end of each
fiscal year subsequent to that covered by the financial statements
presented herein, containing financial statements meeting the
requirements of Regulation S-X and the supplementary financial
information specified by Item 302 of Regulation S-K.
2. The undersigned registrant hereby undertakes not to issue,
clear, guarantee or accept any securities registered herein until
there is a definitive options disclosure document meeting the
requirements of Rule 9b-1 of the Securities Exchange Act of 1934 with
respect to the class of Options.
<PAGE>
The Options Clearing Corporation and Subsidiaries
Statements of Consolidated Financial Condition
1995 Financial Statements
<TABLE>
<CAPTION>
December 31 1995 1994
<S> <C> <C>
Assets: Current Assets:
Cash and cash equivalents $18,488,816 $12,510,290
Accounts receivable 5,569,166 5,188,977
Exchange billing receivable Note 9 6,395,451 5,982,965
Due from participant exchanges Note 9 708,873 879,577
Other current assets 2,496,428 2,710,955
Deferred income taxes Note 10 1,411,729 1,171,656
-------------------------------
Total Current Assets 35,070,463 28,444,420
Property and Equipment:
Data processing equipment, furniture, etc. 6,664,817 7,515,242
Building and leasehold improvements 4,125,417 4,509,990
Total property and equipment 10,790,234 12,025,232
Less accumulated depreciation and amortization (9,076,743) (9,984,193)
Property and equipment-net 1,713,491 2,041,039
Clearing fund Note 4 461,232,000 400,353,000
Other assets 746,521 184,039
Deferred income taxes Note 10 1,133,344 740,073
-------------------------------
Total Assets $499,895,819 $431,762,571
===============================
Liabilities and
Shareholders'
Equity: Current Liabilities:
Accounts payable $1,377,946 $1,391,458
SEC fees payable 6,059,954 4,945,423
Income taxes payable 709,966 170,242
Refundable clearing fees Note 7 1,723,550 1,292,468
Exchange billing payable Note 9 6,395,451 5,982,965
Other accrued expenses 5,416,770 2,682,953
-------------------------------
Total Current Liabilities 21,683,637 16,465,509
-------------------------------
Clearing fund Note 4 461,232,000 400,353,000
Commitments and contingent liabilities
Notes 2, 3, 4, 5, 8, 13
Shareholders' Equity Note 5:
Common stock 600,000 600,000
Paid-in capital 1,393,332 1,393,332
Retained earnings 15,320,183 13,284,063
-------------------------------
Total 17,313,515 15,277,395
Less treasury stock (333,333) (333,333)
-------------------------------
Total Shareholders' Equity 16,980,182 14,944,062
-------------------------------
Total Liabilities and Shareholders'
Equity $499,895,819 $431,762,571
===============================
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
The Options Clearing Corporation and Subsidiaries
Statements of Consolidated Financial Condition
1995 Financial Statements
<TABLE>
<CAPTION>
December 31 1995 1994 1993
<S> <C> <C> <C>
Revenues: Clearing fees Note 7 $47,011,981 $44,499,820 $38,088,237
Interest 2,255,708 1,078,747 927,890
Disclosure documents 390,369 1,502,545 233,234
Data processing service fees 2,023,754 2,029,553 1,856,987
Other 3,910,274 3,508,572 3,230,992
-----------------------------------------------
Total Revenues 55,592,086 52,619,237 44,337,340
-----------------------------------------------
Expenses: Employee costs 22,507,972 20,719,708 20,499,250
Data processing costs 10,154,623 9,506,589 7,458,254
Professional fees 6,082,934 4,537,648 2,662,111
General and administrative Note 9 7,332,590 7,093,871 6,998,345
Disclosure documents 279,515 1,211,891 219,832
Rental, other than data processing
equipment 5,135,437 3,764,890 3,837,638
Depreciation and amortization 861,619 781,003 841,910
-----------------------------------------------
Total Expenses 52,354,690 47,615,600 42,517,340
-----------------------------------------------
Income before provision for taxes on
income 3,237,396 5,003,637 1,820,000
-----------------------------------------------
Provision for Taxes on Income Note 10
Federal-current 1,419,724 1,653,386 1,160,684
State and local-current 414,896 412,336 139,101
Federal-deferred (500,008) (19,963) (539,765)
State-deferred (133,336) (2,348) (63,502)
-----------------------------------------------
Total Provision for Taxes on
Income 1,201,276 2,043,411 696,518
-----------------------------------------------
Net income
[Earnings per Class B common
share 1995, $81.44; 1994, $118.41;
1993, $40.85] Notes 1 and 5 2,036,120 2,960,226 1,123,482
-----------------------------------------------
Retained Earnings, Beginning of Year 13,284,063 10,323,837 9,200,355
-----------------------------------------------
Retained Earnings, End of Year $15,320,183 $13,284,063 $10,323,837
===============================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
The Options Clearing Corporation and Subsidiaries
Statements of Consolidated Financial Condition
1995 Financial Statements
<TABLE>
<CAPTION>
December 31 1995 1994 1993
<S> <C> <C> <C>
Cash Flows from
Operating
Activities: Net income $2,036,120 $2,960,226 $1,123,482
Adjustments to Reconcile Net Income to Net
Cash Flows from Operating Activities:
Depreciation and amortization 861,619 781,003 841,910
Deferred income taxes (633,344) (22,311) (603,267)
Disposal of assets 225,941
Changes in Balance Sheet Items:
Accounts receivable (621,972) (796,865) (1,031,111)
Other current assets 214,527 (1,736,750) 81,077
Accounts payable and accrued expenses 4,247,322 1,532,684 302,444
Refundable clearing fees 431,082 (981,512) 1,417,604
Income tax payable 539,724 (1,092,499) 756,083
-----------------------------------------
Net cash flows from operating activities 7,301,019 643,976 2,888,222
-----------------------------------------
Cash Flows from
Investing
Activities: Capital expenditures (760,012) (378,076) (184,879)
Other-net (562,481) 99,264 (110,585)
-----------------------------------------
Net cash flows from investing activities (1,322,493) (278,812) (295,464)
-----------------------------------------
Cash Flows from
Financing
Activities: Purchase of Treasury Stock - (333,333) -
-----------------------------------------
Net increase in cash and cash equivalents 5,978,526 31,831 2,592,758
Cash and cash equivalents,
Beginning of Year 12,510,290 12,478,459 9,885,701
-----------------------------------------
Cash and cash equivalents, End of Year $18,488,816 $12,510,290 $12,478,459
=========================================
Supplemental disclosure of cash flow
information:
Cash paid for income taxes $1,849,691 $3,262,473 $364,759
=========================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of The
Options Clearing Corporation ("OCC") and its wholly-owned
subsidiaries, The Intermarket Clearing Corporation ("ICC") and
International Clearing Systems, Inc. ("ICSI"). All intercompany
balances and transactions have been eliminated in consolidation.
References to the "Clearing Corporation" will include both OCC and its
subsidiaries, as applicable. Certain amounts in the financial
statements are based on management estimates which may differ from
actual outcomes.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are comprised primarily of United
States Government securities held under agreements issued by major
banking institutions, which mature on the next business day. During
the term of the agreements, the underlying securities are transferred
through the Federal Reserve System to a custodial account maintained
by the issuing bank for the benefit of the Clearing Corporation. The
Clearing Corporation considers all highly liquid debt instruments with
a maturity of three months or less from the date of purchase to be
cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, net of accumulated
depreciation. Depreciation is computed using straight-line and
accelerated methods based on estimated useful lives of five to twenty
years. Leasehold improvements are amortized over the terms of the
related leases.
EARNINGS PER SHARE
Earnings per share are calculated based on the weighted average
number of Class B common shares outstanding during the year; 25,000
shares in 1995, 25,000 shares in 1994 and 27,500 shares in 1993.
RECLASSIFICATIONS
Certain prior years' amounts have been reclassified to conform
with the current year presentations.
NOTE 2. OFF-BALANCE-SHEET RISK, CONCENTRATION OF CREDIT RISK AND FAIR
VALUE OF FINANCIAL INSTRUMENTS
OCC is the registered clearing agency for U.S. listed securities
options. OCC issues, clears and guarantees option contracts traded on
its Participant Exchanges. OCC clears options on several types of
underlying interests including common stocks, foreign exchange, stock
indexes, American depository receipts and interest rate composites.
OCC also is the clearing agency for exercise settlements of foreign
currency options and stock index options. OCC maintains lines of
credit with major domestic and foreign banks in the amount of
approximately $1.1 billion as of December 31, 1995. Of these lines of
credit, $930 million are available to ensure the performance of the
foreign currency settlement process in the event that a Clearing
Member should fail to deliver foreign currency options on a timely
<PAGE>
basis; $150 million are available to reimburse OCC to meet any
suspension obligations or to reimburse itself for bankruptcy losses;
$20 million are available to meet working capital requirements
incurred in the ordinary course of business. Commitment fees are paid
to the issuing banks for these lines of credit.
ICC clears, settles and guarantees futures contracts and options
on futures contracts executed on its Participant Exchanges. ICC
maintains lines of credit with major domestic and foreign banks in the
amount of approximately $50 million as of December 31, 1995. These
lines of credit are utilized to ensure performance of the foreign
currency settlement process in the event that a Clearing Member should
fail to deliver foreign currencies on a timely basis. Commitment fees
are paid to the issuing banks for these lines of credit.
OCC and ICC perform a guarantee function which ensures the
financial integrity of the markets they clear. Consequently, OCC and
ICC bear counterparty credit risk in the event that future market
movements create conditions which could lead to Clearing Members
failing to meet their obligations to OCC or ICC. OCC and ICC are thus
exposed to off-balance-sheet risk, with respect to the securities
broker dealers and futures commission merchants that are their
respective Clearing Members.
OCC and ICC reduce their exposure through a risk management
program that strives to achieve a prudent balance between market
integrity and liquidity. This program of safeguards, which provides
substance to OCC's guarantee, consists of: rigorous initial and
ongoing financial responsibility standards for membership; margin
deposits (see Note 3); and clearing fund deposits (see Note 4).
The carrying value of the Clearing Corporation's cash and cash
equivalents approximates fair value because of the short maturities of
those investments. Margin deposits (see Note 3) and clearing fund
deposits (see Note 4) are presented at market value at December 31,
1995, in accordance with the rules of the Clearing Corporation.
Neither OCC nor ICC assumes any guarantor role unless it has a
precisely equal, and offsetting, claim against another Clearing
Member. Therefore, the fair value of the open interest of options,
futures and options on futures contracts cleared and settled by the
Clearing Corporation is not included in the statements of consolidated
financial condition.
NOTE 3. MARGIN DEPOSITS
The rules and practices established by OCC's Membership/ Margin
Committee provide that each Clearing Member representing the writer of
an option must either deposit the underlying interest or maintain
specified margin deposits in the form of cash, bank letters of credit,
U.S. Government securities (as defined in the By-laws) or other
acceptable margin securities ("valued securities"). The margin
deposits of each Clearing Member are available to meet only the
financial obligations of that Clearing Member to OCC. All margin
deposits, except letters of credit, are held at securities
depositories or banks. All obligations and non-cash margin deposits
are marked to market on a daily basis. OCC also haircuts, on a daily
basis, the value of equity securities and Government securities with
more than one year to maturity in order to provide a cushion against
price fluctuations. Valued securities are given margin credit at 60%
<PAGE>
of the daily exchange closing price. The margin credit granted for the
securities of any one issuer cannot exceed 10% of a Clearing Member's
daily margin requirement.
The Rules of ICC provide that each Clearing Member, with respect
to each option on futures contract for which it represents the writer,
and with respect to each futures contract, is required to deposit and
maintain specified margin in the form of cash, U.S. Government
securities, or bank letters of credit.
Under the Rules of the Clearing Corporation, bank letters of
credit are required to be irrevocable except upon two full business
days' prior written notice. Cash margin deposits which are held may be
invested, and any interest or gain received or loss incurred on
invested funds accrues to the Clearing Corporation. OCC's margin
deposits are not included in the statements of consolidated financial
condition.
The values of underlying securities, Government securities (all
foreign government securities are converted to U.S. dollars using the
year-end exchange rate) and margin deposits at December 31, 1995 for
the Clearing Corporation were approximately as follows:
<TABLE>
<S> <C>
Underlying securities at market value $ 3,907,464,000
Valued securities at market value 6,245,400,000
Cash and temporary investments 12,983,000
Bank letters of credit 1,873,631,000
Government securities deposited as margin
(at market value at date of deposit, which
approximates market value at December 31, 1995) 1,009,098,000
-------------------
Total $13,048,576,000
===================
</TABLE>
Further, as of December 31, 1995, OCC had on deposit Index Option
Escrow Receipts which represent acceptable collateral on deposit with
approved banks which OCC has accepted in lieu of margin for
approximately 183,000 short index call contracts. At December 31,
1995, the market value of the index option contracts collateralized
under the escrow receipts program approximated
$11 billion.
OCC also maintains cross-margining arrangements with U.S.
commodities clearing organizations, including ICC. Under the terms of
the arrangements with the commodities clearing organizations, an OCC
Clearing Member that is also a Clearing Member of a commodities
clearing organization, or that has an affiliate that is a Clearing
Member of a commodities clearing organization, may maintain
cross-margin accounts in which the Clearing Member's positions in
OCC-cleared options are combined, for purposes of calculating margin
requirements, with positions of the Clearing Member (or its affiliate)
in futures contracts and/or options on futures contracts. Margin
deposits on the combined positions are held jointly by OCC and the
commodities clearing organization and are available (together with any
proceeds of the options and futures positions themselves) to meet
financial obligations of the Clearing Member(s) to OCC and the
commodities clearing organization. In the event that either OCC or the
commodities clearing organization suffers a loss in liquidating
<PAGE>
positions in the cross-margin account, the loss is to be shared
equally by OCC and the commodities clearing organization. Margin
deposits in respect of cross-margin accounts may be in the form of
cash, valued securities, U.S. Government securities or bank letters of
credit. The value of margin deposits at December 31, 1995 for
cross-margin accounts, which is included in the above table, was
approximately $385 million.
NOTE 4. CLEARING FUND DEPOSITS
OCC and ICC maintain separate clearing funds to cover possible
losses suffered by either of them should a Clearing Member, bank, or a
securities or commodities clearing organization default. A Clearing
Member's clearing fund deposit is based on its pro-rata share of
options, futures or options on futures activity which is recomputed
monthly. Therefore, the OCC and ICC clearing funds expand and contract
in size in relation to activity in their respective markets. The OCC
and ICC clearing funds mutualize the risk of default among all
Clearing Members. The entire clearing fund is available to cover
potential losses in the unlikely event that margin deposits and the
clearing fund deposits of a defaulting Member are inadequate or not
immediately available to fulfill that Member's outstanding financial
obligations. In the event of a default, the Clearing Corporation is
required, in the case of an exercise of a call option, to sell, and in
the case of an exercise of a put option, to buy, the underlying
interest covered by the option at the stated exercise price. In
addition, in the event a futures contract or an option on futures
contract remains open after the close of business on the last day of
trading, ICC is required to purchase the commodity underlying the
contract from the seller of the contract and to sell the commodity
underlying the contract to the purchaser.
Clearing fund deposits must be in the form of cash or Government
securities (as defined in the By-laws), as the clearing fund is
intended to provide the Clearing Corporation with an immediately
available pool of liquid assets. Clearing Members may make clearing
fund deposits in cash to the Clearing Corporation or an approved
segregated funds account, or in Government securities to various
securities depositories or banks. Cash deposits in non-segregated
accounts may be invested and any interest or gain received or loss
incurred on invested funds accrues to the Clearing Corporation.
Cash in a segregated account is a demand deposit which is held in
the name of the Clearing Corporation, which names an individual
Clearing Member whose clearing fund obligation the deposit represents
and which can only be withdrawn by the Clearing Corporation. These
segregated funds cannot be invested by the Clearing Corporation.
Clearing fund cash and securities deposits are included in the
statements of consolidated financial condition. The total amount of
the clearing funds (all foreign government securities are converted to
U.S. dollars using the year-end exchange rate) at December 31, 1995
was as follows:
<PAGE>
Cash and temporary investments $ 7,621,000
Segregated funds accounts 5,776,000
Government securities, at market value 447,835,000
---------------
Total $461,232,000
===============
The clearing funds maintained by OCC and ICC were $458,874,000
and $2,358,000, respectively.
NOTE 5. COMMON STOCK, STOCKHOLDERS AGREEMENT AND AGREEMENTS WITH
PARTICIPANT EXCHANGES
OCC has Class A and Class B common stock, both with $10 par
value, 60,000 shares authorized, 30,000 shares issued and 25,000
shares outstanding at December 31, 1995 and 1994. Treasury stock
comprises 5,000 shares of Class A common stock and 5,000 shares of
Class B common stock at a cost of $333,333. The Class B common stock
is issuable in twelve series of 5,000 shares each. The Class B common
stock is entitled to receive dividends whereas the Class A common
stock is not. Upon liquidation of OCC, the Class A common stock would
participate only to the extent of its par value.
The By-laws of OCC provide that any national securities exchange
or national securities association which meets specific requirements
may become a participant by acquiring 5,000 shares of Class A common
stock and 5,000 shares of Class B common stock.
The purchase price for such shares will be the aggregate book
value of a comparable number of shares at the end of the preceding
calendar month, but not less than $250,000 nor more than $333,333.
OCC is a party to the Stockholders Agreement and Restated
Participant Exchange Agreement with its shareholders.
The Stockholders Agreement provides that each stockholder appoint
the members of the Nominating Committee of OCC as its proxy for
purposes of voting its shares for the appointment of member directors,
the Chairman of OCC as the management director and members of the
following year's Nominating Committee. It also provides for the
purchase by OCC of all of its stock owned by any stockholder under
specified circumstances, but the obligation to pay the purchase price
will be subordinated to OCC's obligations to creditors and the
purchase price cannot be paid if the payment would reduce the capital
and surplus below $1,000,000. If OCC is required to purchase its stock
from any stockholder, the purchase price for the two years following
the date the stockholder acquired its stock is the stockholder's
purchase price paid reduced by $100,000 and, thereafter, the purchase
price at the date of purchase is the lesser of the aggregate book
value of the shares or the original purchase price paid less $80,000,
$60,000, $40,000, $20,000 or zero after the second, third, fourth,
fifth or sixth year, respectively, from the date of sale of such
stock.
The Restated Participant Exchange Agreement deals with the
business relationship between and among OCC and each participant
securities exchange and securities association. Likewise, ICC is a
party to a Participant Exchange Agreement with its participant futures
exchanges ("participant" or "participants"), which deals with the
business relationship between ICC and each participant and among such
participants.
<PAGE>
NOTE 6. SALE AND BUY BACK AGREEMENTS
Sale and Buy Back agreements outstanding, including amounts in
margin and clearing fund deposits, averaged $49 million during 1995
and the maximum amount outstanding at any month-end during 1995 was
$462.2 million. The amounts outstanding approximate the market value
of the underlying securities.
NOTE 7. CLEARING FEES
The Boards of Directors set clearing fees and determine the
amounts of refunds, if any, based upon the current needs of OCC and
ICC. The Boards of Directors have determined in the years ended
December 31, 1995, 1994 and 1993 that refunds of clearing fees should
be made to Clearing Members. Such refunds, which have been netted
against clearing fees in the statements of consolidated income,
amounted to $8,220,747, $9,292,468 and $6,273,980 for the years ended
December 31, 1995, 1994 and 1993, respectively.
NOTE 8. COMMITMENTS
Minimum rental payments under non-cancelable operating leases
(principally for office space and data processing equipment) in the
aggregate and for the next five years in effect as of December 31,
1995, are as follows:
Year Ended December 31 Amount
1996 $ 6,240,000
1997 5,313,000
1998 4,251,000
1999 3,458,000
2000 2,673,000
Thereafter 4,338,000
-------------
Total $26,273,000
=============
Rental expense for the years ended December 31, 1995, 1994 and
1993 amounted to $11,026,000, $9,625,000 and $9,013,000, respectively.
Included in rental expense for 1995 is a $1,116,919 charge for
vacating certain office space.
Total minimum rentals to be received under non-cancelable
subleases as of December 31, 1995 are $941,000. Rental income received
under subleases for the years ended December 31, 1995, 1994 and 1993
amounted to $136,000, $253,000 and $211,000, respectively.
The Clearing Corporation has employment agreements with certain
of its senior officers. The aggregate commitment for future salaries
at December 31, 1995, excluding bonuses, was approximately $1.5
million.
NOTE 9. RELATED PARTY TRANSACTIONS
Certain exchanges and their affiliates provide some operational
and other services on behalf of OCC for which expenses of
approximately $94,000, $83,500 and $106,000 were incurred for the
years ended December 31, 1995, 1994 and 1993, respectively.
The Clearing Corporation also bills and collects transaction fees
for the Chicago Board Options Exchange, Incorporated and the New York
<PAGE>
Futures Exchange, Inc.; Fees billed and uncollected at December 31,
1995 and 1994 were $6,393,000 and $5,983,000 respectively, and are
included in the statements of consolidated financial condition as
Exchange billing receivable and payable.
In 1992, OCC entered into a joint marketing effort with its
Participant Exchanges to form The Options Industry Council ("OIC").
The total amounts expended by OCC on behalf of OIC for the years ended
December 31, 1995, 1994 and 1993 were $2,000,000, $1,774,000 and
$2,075,000, respectively. The Participant Exchanges' share of OIC
expenditures for the years ended December 31, 1995, 1994 and 1993 was
$1,000,000, $889,000 and $1,034,000, respectively. At December 31,
1995 and 1994, the amounts due from Participant Exchanges were
$709,000 and $880,000, respectively.
Transactions between OCC and shareholder exchanges and their
affiliates are settled by cash payments.
NOTE 10. INCOME TAXES
The Clearing Corporation uses the asset and liability method in
accounting and reporting for income taxes in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes." The asset and liability method requires deferred taxes
be adjusted to reflect the tax rates at which future taxable amounts
will be settled and realized. Effective January 1, 1993, the
Corporation adopted SFAS No. 109 which did not have a material effect
on the consolidated financial statements of the Corporation.
The provision for taxes on income is reconciled to amounts
determined by applying the statutory Federal income tax rate (35% in
1995, 1994 and 1993) as follows:
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
<S> <C> <C> <C>
Federal income tax at the statutory rates $1,133,089 $1,751,273 $637,000
Permanent tax differences 86,398 68,656 22,507
State income tax effect 183,014 271,357 55,211
Tax credits (162,394)
Other (38,831) (47,875) (18,200)
---------------------------------------------------
Provision for taxes on income $1,201,276 $2,043,411 $696,518
===================================================
</TABLE>
The deferred tax asset consists of the following:
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994
<S> <C> <C>
Compensation and employee benefits $1,065,137 $ 994,894
Other items 346,592 176,762
-------------------------------
Current asset 1,411,729 1,171,656
-------------------------------
Accelerated depreciation 452,315 329,514
Capitalized start-up costs 256,600 410,559
Lease write-off 424,429
-------------------------------
Long-term asset 1,133,344 740,073
-------------------------------
Total $2,545,073 $1,911,729
===============================
</TABLE>
<PAGE>
NOTE 11. RETIREMENT PLANS
The Clearing Corporation has a trusteed non-contributory
retirement plan covering employees who meet specified age and service
requirements. Retirement benefits are primarily a function of both
years of service and the level of compensation during the highest
consecutive five years out of the last ten years before retirement.
The Clearing Corporation also has a funded supplemental executive
retirement plan ("SERP"). Retirement benefits are primarily a function
of both years of service and the level of compensation during the
highest three non-consecutive years out of the last ten years before
retirement.
The Clearing Corporation's funding policies, subject to the
minimum funding requirements of U.S. employee benefit and tax laws,
are to contribute such amounts as are determined on an actuarial basis
to provide the plans with assets sufficient to meet the benefit
obligations of the plans.
The components of net periodic pension cost were as follows:
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994 1993
<S> <C> <C> <C>
Service cost $ 549,000 $562,000 $467,000
Interest cost 967,000 816,000 644,000
Actual return on assets (1,642,000) 63,000 (822,000)
Net amortization and deferrals 964,000 (722,000) 199,000
--------------------------------------------------
Net periodic pension cost $ 838,000 $719,000 $488,000
==================================================
</TABLE>
Assets and liabilities for the Retirement Plan and SERP were
measured as of September 30, 1995. The funded status as of December
31, 1995 is the same as the funded status as of September 30, 1995.
The plans' funded status follows:
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994
<S> <C> <C>
Actuarial present value of projected benefit obligation
Vested benefits $(9,989,000) $(6,027,000)
Nonvested benefits (1,565,000) (2,306,000)
-----------------------------------
Accumulated benefit obligation (11,554,000) (8,333,000)
Effect of future compensation increases (1,933,000) (1,608,000)
-----------------------------------
Projected benefit obligation ("PBO") (13,487,000) (9,941,000)
Plan assets at fair value 10,775,000 8,466,000
-----------------------------------
Plan assets in excess of (less than) PBO (2,712,000) (1,475,000)
Unrecognized net (gain) loss 1,328,000 781,000
Unrecognized net transition obligation 101,000 114,000
Unrecognized prior service cost 671,000 76,000
Prepaid (accrued) pension cost (612,000) (504,000)
Additional minimum liability (558,000) --
-----------------------------------
Prepaid pension cost/(pension liability) (1,170,000) --
-----------------------------------
Intangible asset offsetting additional
minimum liability $ 558,000 ($504,000)
===================================
</TABLE>
The major assumptions used to determine the projected benefit
obligation are 7.75% interest discount and 4.75% future salary
increases as of December 31, 1995 and 8.5% interest discount and 4.75%
future salary increases as of December 31, 1994. The expected
long-term return on assets was 9.5% for both 1995 and 1994.
The plans' assets consist primarily of listed common stocks,
fixed income securities and units of certain trust funds administered
by Harris Trust and Savings Bank.
The Clearing Corporation also maintains a defined contribution
plan qualified under Internal Revenue Code section 401(k) for eligible
employees who elect to participate in the plan. Eligible employees may
elect to have their salaries reduced by a percentage. This amount is
then paid into the plan by the Clearing Corporation on behalf of the
employee.
The Clearing Corporation will make matching contributions to the
participant's account subject to certain limitations. The Clearing
Corporation's expenses for matching contributions to the plan for the
years ended December 31, 1995, 1994 and 1993 were $401,000, $360,000
and $363,000, respectively.
NOTE 12. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Effective January 1, 1993, the Clearing Corporation adopted SFAS
No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions," which requires accrual of postretirement benefits during
the years an employee provides services.
Eligibility for the Clearing Corporation's "Defined Dollar
Benefit Plan" for employees and their covered dependents is based upon
age and years of service at time of retirement.
Net postretirement health care cost for 1995 and 1994 consisted
of the following:
<PAGE>
Year Ended December 31 1995 1994
Service cost $ 29,000 $ 62,000
Interest cost 43,000 82,000
Expected return on assets -- --
Amortization of transition obligation 28,000 28,000
--------------------------
Net postretirement benefit cost $100,000 $172,000
==========================
The Clearing Corporation's postretirement health care plan
currently is not funded. The status of the plan follows:
<TABLE>
<CAPTION>
Year Ended December 31 1995 1994
<S> <C> <C>
Accumulated Postretirement Benefit Obligation
(APBO):
Active employees fully eligible for
benefits $(349,000) $(580,000)
Other active employees (46,000) (50,000)
Current retirees (166,000) (81,000)
----------------------------
Total (561,000) (711,000)
Fair value of assets -- --
APBO (In excess of) less than fair
value of assets (561,000) (711,000)
----------------------------
Unrecognized amounts:
Transition obligation 477,000 505,000
Prior service cost
Losses (gains) (262,000) (61,000)
----------------------------
Total 215,000 444,000
----------------------------
Accrued postretirement benefit cost $(346,000) $(267,000)
============================
</TABLE>
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit was 9.90% in 1995, gradually
declining to 5% by the year 2003 and remaining at that level
thereafter. A one-percentage-point increase in the assumed health care
cost trend rate for each year would not increase the accumulated
postretirement benefit obligation or net postretirement health care
cost under the Defined Dollar Benefit Plan.
The assumed discount rate used in determining the accumulated
postretirement benefit obligation was 7.75% in 1995 and 8.50% in 1994.
NOTE 13. CONTINGENCIES
In the normal course of business, the Clearing Corporation may be
subjected to various lawsuits and claims. At December 31, 1995, no
litigation exists which management of the Clearing Corporation
believes would have a material adverse effect on the consolidated
financial statements of the Clearing Corporation.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Options Clearing Corporation and Subsidiaries:
We have audited the accompanying statements of consolidated
financial condition of The Options Clearing Corporation and
Subsidiaries (the "Corporation") as of December 31, 1995 and 1994 and
the related statements of consolidated income and retained earnings
and of consolidated cash flows for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Corporation's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the consolidated financial position
of the Corporation at December 31, 1995 and 1994 and the results of
its operations and its cash flows for each of the three years in the
period ended December 31, 1995 in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Chicago, Illinois
January 29, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Chicago, and the State of Illinois on the
30th day of September, 1996.
THE OPTIONS CLEARING CORPORATION
By: /s/ Wayne P. Luthringshausen
-----------------------------
Wayne P. Luthringshausen
Chairman and Principal
Executive Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities set forth below on September 30, 1996.
<TABLE>
<S> <C>
/s/ Wayne P. Luthringshausen /s/ David Krell
- ----------------------------------------------------- -----------------------------------------------------
Wayne P. Luthringshausen, David Krell, Director
Chairman and Principal Executive Officer
/s/ Alfred J. Golden /s/ William F. Devin
- ----------------------------------------------------- -----------------------------------------------------
Alfred J. Golden, Director William F. Devin, Director
/s/ Paul G. Stevens, Jr. /s/ William A. Rogers
- ----------------------------------------------------- -----------------------------------------------------
Paul G. Stevens, Jr., Principal Financial Officer William A. Rogers, Director
/s/ Robert M. Greber /s/ Douglas J. Engmann
- ----------------------------------------------------- -----------------------------------------------------
Robert M. Greber, Director Douglas J. Engmann, Director
/s/ Nicholas J. Fergadis /s/ Harvey Silverman
- ----------------------------------------------------- -----------------------------------------------------
Nicholas J. Fergadis, Principal Accounting Officer Harvey Silverman, Director
/s/ M. Blair Hull /s/ Freddy Enriquez
- ----------------------------------------------------- -----------------------------------------------------
M. Blair Hull, Director Freddy Enriquez, Director
/s/ Marc L. Berman /s/ Nicholas A. Giordano
- ----------------------------------------------------- -----------------------------------------------------
Marc L. Berman, Director Nicholas A. Giordano, Director
/s/ Edward J. Joyce
- ----------------------------------------------------- -----------------------------------------------------
Edward J. Joyce, Director Joseph Stefanelli, Director
/s/ W. Gordon Binns, Jr. /s/ Melvin B. Taub
- ----------------------------------------------------- -----------------------------------------------------
W. Gordon Binns, Jr., Director Melvin B. Taub, Director
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears above authorizes Wayne P.
Luthringshausen, or Paul G. Stevens, Jr., or George S. Hender,
severally, to execute in the name of each such person, and file, any
amendments to this Registration Statement necessary or advisable to
enable registrant to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the
registration of the securities which are the subject hereof, which
amendment may make such changes herein as any of the above-named
attorneys deems appropriate.
<PAGE>
EXHIBIT INDEX
The following documents are filed as a part of this Registration
Statement.
Exhibit Number Description of Document
- -------------- ------------------------
5 Opinion of Schiff Hardin & Waite*
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Schiff Hardin & Waite
(included in Exhibit 5)
- -------------------
* To be filed by amendment
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement on Form S-20
of The Options Clearing Corporation of our report dated January 29,
1996, appearing in Part II hereof, and to the reference to us under
the heading "Legal Opinions and Experts" in Part II hereof.
DELOITTE & TOUCHE LLP
Chicago, Illinois
September 27, 1996
