As filed with the Securities and Exchange Commission on April 1, 1999
Registration No. 333-48897
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
POST-EFFECTIVE AMENDMENT NO. 1
TO
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)
With a copy to:
William H. Navin
Schiff Hardin & Waite
7200 Sears Tower
Chicago, Illinois 60606
312-258-5534
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Amending Part I and Part II<PAGE>
PROSPECTUS
[L O G O]
THE OPTIONS CLEARING CORPORATION
PUT AND CALL OPTIONS
This prospectus pertains to put and call options ("Options")
issued by The Options Clearing Corporation ("OCC").
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.
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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 April 30, 1999.
2<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 would be 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 could 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,
transactions in Options executed on such exchanges, and non-U.S.
members of such exchanges 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.
3<PAGE>
THE OPTIONS CLEARING CORPORATION
OCC was organized as a corporation in 1972 under the laws of the
state of Delaware. 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 LLC, the Chicago Board
Options Exchange, Incorporated, the Pacific 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.
DESCRIPTION OF OPTIONS
GENERAL
The Options covered by this prospectus are put and call options
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, American Depositary Receipts, American
Depositary Shares, and interests in unit investment trusts, investment
companies and similar entities holding portfolios or baskets of common
stocks, all of which are included in the term "stock" as used in this
prospectus. Options 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 and
mutual fund 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." Packaged spread
Options, calling for payment, upon exercise, of the net exercise
settlement values of specified types of spread positions, have also
been approved for trading. Options may be traded on other underlying
interests in the future.
There are three "styles" of Options-American, European, and
capped. Subject to certain limitations prescribed in the by-laws and
rules of OCC, an American-style Option may be exercised at any time
prior to expiration. A European-style Option or a capped Option may
4<PAGE>
be exercised only at expiration. In addition, a capped Option 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 Option), or equals or is less than (in the case
of a put Option), the pre-established "cap price" for the Option.
Certain American-style and European-style Options will be
automatically exercised at expiration if they are in the money or in
the money by a minimum amount. An Option 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.
Some Options 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 a fixed or
determinable exercise price. Other Options are "cash-settled." When a
cash-settled Option is exercised, the holder is entitled to receive a
cash "exercise settlement amount." The exercise settlement amount for
a cash-settled Option 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 Options may provide for payments or
deliveries prior to exercise, such as dividend equivalent payments.
As of the date of this prospectus, an exchange has proposed to
trade "differential Options." A differential Option is a cash-settled
European-style Option based on an index reflecting the differential
(positive in the case of a call or negative in the case of a put)
between the percentage price performance of a designated interest and
that of a benchmark interest over the life of the Option. Other
exchanges have proposed to trade Options on exchange-traded mutual
fund shares. Trading of differential Options and Options on exchange-
traded mutual fund shares is subject to SEC approval.
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.
5<PAGE>
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 certain Options, OCC reserves the right to reject even
properly reported transactions if the Clearing Member representing the
buyer fails to meet its obligations to OCC before the time when the
Option would otherwise be issued. If a transaction is rejected for
that reason, the writer may have remedies under the rules of the
market where the transaction took place.
2. EXERCISE AND SETTLEMENT
When OCC issues an Option, 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. The procedures whereby OCC discharges these obligations
are prescribed in the by-laws and rules of OCC, and are summarized
below.
After an Option 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.
While an American-style Option normally can be exercised at any
time prior to its expiration, and a European-style or capped-style
Option ordinarily can be exercised at expiration, both OCC and the
Options markets have the authority to restrict the exercise of Options
at certain times in specified circumstances. It also is possible that
a court, the SEC or another regulatory agency having jurisdiction
would take action which would have the effect of restricting the
exercise of an Option or settlement of such exercise. 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. Further, certain restrictions could prevent exercise
throughout the exercise period, in which event an Option would expire
worthless.
6<PAGE>
A. STOCKS. Settlement obligations among Clearing Members
resulting from the exercise of Options calling for the delivery of
stocks are ordinarily discharged through a stock clearing corporation.
Like OCC, a stock clearing corporation is registered with the SEC as a
clearing agency, and its rules are subject to SEC review. After an
exercise of an Option calling for the delivery of stock has been
assigned as described above, OCC will report the exercise to the stock
clearing corporation. Each Clearing Member (or its agent) then looks
to the stock clearing corporation for settlement, and receives
delivery of the underlying stock or payment of the exercise price, as
the case may be, in accordance with the rules of the clearing
corporation. The clearing corporation in turn looks to the other
Clearing Member for an offsetting delivery or payment. When an
exercise is submitted to a stock clearing corporation for settlement
and not rejected by it, the responsibility for completing the
settlement passes from OCC to the stock clearing corporation. This
occurs on or prior to the exercise settlement date, at a time
determined by agreement between OCC and the stock clearing
corporation. After that time, OCC has no further responsibility to
its Clearing Members for the exercise. Instead, rights and
responsibilities run between the exercising and assigned Clearing
Members and the stock clearing corporation. In unusual circumstances,
OCC may require that particular exercises (or exercises of stock
Options generally) be settled directly between the exercising and the
assigned Clearing Members. In those cases, OCC's obligations are
discharged when the aggregate exercise price in the case of a put, or
the underlying stock in the case of a call, is delivered to the
exercising Clearing Member.
B. DEBT INSTRUMENTS. Exercises of Options 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.
C. FOREIGN CURRENCIES. Exercises of Options 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 (as designated by
OCC, in the case of the euro). 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 for 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.
7<PAGE>
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.
D. CASH SETTLEMENTS. Exercises of cash-settled Options are
settled through OCC. The exercise settlement amount is credited to
the exercising Clearing Member's settlement account with OCC and
charged to the account of the assigned Clearing Member. OCC's
obligations are discharged when the exercise settlement amount is
credited to the account of the exercising Clearing Member. In the
future, exchanges may introduce cash-settled Options with exercise
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.
Exercise settlement amounts for cash-settled Options 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 exercise
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.
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, OCC may offset
the Clearing Member's purchase and sale obligations against each
other, so that only the net purchase obligation or the net sale
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 purchase
and sale obligations with respect to 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 exercise 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
8<PAGE>
for the funds 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 exercise
settlement procedures. These special procedures may involve delaying
settlements or fixing 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 Options to compensate
for such substitute deliveries.
3. REMEDIES
A. GENERAL RULE. If an exercising or an assigned Clearing
Member is suspended by OCC, with the result that a pending exercise
will not be settled in the ordinary course, or if a Clearing Member
fails to make settlement for an exercise that was to have been settled
directly with another Clearing Member or an exercise of foreign
currency Options, OCC may require that the underlying interest be
bought in or sold out by the non-defaulting party to the exercise.
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 an exercising Clearing Member would constitute claims
against the general assets of OCC.
B. CASH-SETTLED PRODUCTS. Even if a Clearing Member that is a
party to an exercise of a cash-settled Option is suspended or fails to
pay the exercise settlement amount to OCC, OCC is obligated to settle
with all Clearing Members that have filed exercise notices that were
assigned to the suspended or defaulting Clearing Member.
C. SETTLEMENTS THROUGH STOCK CLEARING CORPORATIONS. After
responsibility for completing a settlement passes to a stock clearing
corporation as described above, the exercising and assigned Clearing
Members have no further rights against OCC or any assets in its
possession.
D. TENDER OFFERS, ETC. If an exercising or an assigned
Clearing Member fails to make timely delivery of an underlying
security on the exercise 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. Similarly, a
9<PAGE>
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 obligations in the event that an
exercise is assigned to such writer. 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 obligations with respect
to such Options.
A customer that 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.
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. A
Clearing Member's assets are, of course, subject to claims by
creditors other than OCC.
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
10<PAGE>
Clearinghouses, as well as OCC's ability to impose restrictions on
positions carried by Associate Clearinghouses, would be 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 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 its
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 with various
commodity clearing organizations. Under these arrangements, OCC
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 their obligations (or
obligations of their designated affiliates) 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 requirements reflect the
increase or decrease in risk to OCC associated with the inclusion of
those positions in the Clearing Member's accounts, except that a
Clearing Member may elect to exclude borrow and loan positions from
its margin requirements. In that event, OCC relies on its internal
risk monitoring systems and the Clearing Member's Clearing Fund
11<PAGE>
deposit and the other elements of the OCC back-up system to mitigate
the intra-day risk to OCC created by those positions.
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 call Options, a Clearing Member may deposit the underlying
interest, or, in the case of index Options, a combination of cash and
marketable securities with an aggregate initial value determined in
accordance with the rules of OCC. In lieu of depositing margin with
respect to writing positions in certain put Options, a Clearing Member
may deposit cash and/or short-term government securities with an
aggregate initial value not less than the aggregate exercise price.
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 exercise 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 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 the 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 U.S.
or Canadian government securities or other government securities
12<PAGE>
acceptable to OCC, 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
Clearing Fund deposits may be applied to the discharge of that
obligation. If a Clearing Member's obligation to OCC exceeds its
Clearing Fund deposits, 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
amounts are paid out of a Clearing Fund 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.
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.
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
13<PAGE>
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
corporation through which exercises of stock 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.
14<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 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 three years. The Exchange
Directors and the Management Director are elected for a term of one
year. 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 55, 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, 2000.
FREDDY ENRIQUEZ, age 58, has been a Member Director of OCC since
April, 1995. Mr. Enriquez has been the First Vice President and
Director of Global Securities Operations for Merrill Lynch Pierce
Fenner & Smith, Inc., a securities firm and a Clearing Member of OCC,
since 1992. His present term as a director of OCC expires in April,
2001.
WAYNE W. FIELDSA, age 50, has been a Member Director of OCC since
April, 1999. Mr. Fieldsa has been Executive Vice President of
Brokerage Operations for Charles Schwab & Co., Inc., a securities firm
and a Clearing Member of OCC, since 1994. From 1989 to 1994, Mr.
Fieldsa was a Senior Vice President of Risk Management and Client
Services for National Financial Services, a securities firm and a
Clearing Member of OCC. His present term as a director of OCC expires
in April, 2000.
WILLIAM C. FLOERSCH, age 54, has been a Member Director of OCC
since April, 1998. Mr. Floersch has been President and Chief
II-1<PAGE>
Executive Officer of O'Connor & Company, a securities firm and a
Clearing Member of OCC, since 1997. From 1991 to 1997, Mr. Floersch
served as the Vice Chairman of the Chicago Board Options Exchange,
Incorporated, and was an active market maker on that exchange. His
present term as a director of OCC expires in April, 2001.
MEYER S. FRUCHER, age 53, has been an Exchange Director of OCC,
representing the Philadelphia Stock Exchange, Inc., since September,
1998. Mr. Frucher has been Chairman and Chief Executive Officer of
that exchange since June, 1998. From 1996 to 1998, Mr. Frucher was a
Real Estate and Management Consultant with Robert Plan Corporation, a
subsidiary of the American International Group, in the insurance
industry. From 1988 to 1996, he was the Executive Vice President-
Development for Olympia & York Companies (USA), a real estate firm.
His present term as a director of OCC expires in April, 2000.
WILLIAM GANGI, age 58, has been a Member Director of OCC since
April, 1999. Mr. Gangi has been the Senior Managing Director of the
Professional Clearing Services Division for Bear Stearns & Co., Inc.,
a securities firm and a Clearing Member of OCC, since 1980. His
present term as a director of OCC expires in April, 2002.
ROBERT M. GREBER, age 61, 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. From 1992 to 1996, Mr. Greber was
President and Chief Operating Officer for that exchange. His present
term as a director of OCC expires in April, 2000.
DORCAS R. HARDY, age 52, has been a Public Director of OCC since
April, 1999. Ms. Hardy has been the Principal of Dorcas R. Hardy &
Associates, a government relations and public policy consulting firm
since 1989. From 1996 to 1998, she was the Chairman and Chief
Executive Officer of Work Recovery, Inc., a rehabilitation technology
firm. Ms. Hardy also served as the United States Commissioner of
Social Security from 1986 to 1989. Her present term as a director of
OCC expires in April, 2002.
JOHN C. HARRIS, age 51, has been a Member Director of OCC since
April, 1999. Mr. Harris has been the Executive Vice President and
Manager of the Dealer Services Division for ABN AMRO Incorporated, a
securities firm and a Clearing Member of OCC, since 1997. From 1982
to 1997, Mr. Harris was the Executive Vice President of The Chicago
Corporation, a securities firm, a Clearing Member of OCC and the
predecessor firm of ABN AMRO Incorporated. From 1995 to 1997, Mr.
Harris served as a member of OCC's Nominating Committee and was its
Chairman in 1997. His present term as a director expires in April,
2002.
EDWARD J. JOYCE, age 47, 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
II-2<PAGE>
that exchange since 1987. His present term as a director of OCC
expires in April, 2000.
TIMOTHY R. MULLEN, age 42, has been a Member Director of OCC
since April, 1999. Mr. Mullen has been President and Chief Executive
Officer of First Options of Chicago, Inc., a securities firm and a
Clearing Member of OCC, since 1997. From 1993 to 1997, Mr. Mullen was
the Chairman and Chief Executive Officer of LIT Clearing Services,
Inc., a securities firm and a Clearing Member of OCC. Mr. Mullen has
also been a Managing Director of Spear, Leeds & Kellogg, a securities
firm and a Clearing Member of OCC, since 1991 and a member of the
Executive Committee of Spear Leeds & Kellogg since 1997; a Governor of
the Board of Trade Clearing Corporation and a member of the Business
Committee and the Chairman of the Audit Committee for the Board of
Trade Clearing Corporation since 1998, and served as its Second Vice
Chairman and Chairman of the Audit Committee from 1998 to February
1999 and is currently serving as its First Vice Chairman and as the
Chairman of its Risk Committee. From 1995 to 1997 Mr. Mullen served
as the Chairman of the Clearing Procedures/Regulatory Subcommittee for
the Chicago Board Options Exchange, Incorporated. His present term as
a director expires in April, 2002.
MARTIN PFINSGRAFF, age 44, has been a Member Director of OCC
since April, 1998. Mr. Pfinsgraff has been President of the Capital
Markets Group and has served on the Operating Committee and the Board
of Directors of Prudential Securities Incorporated, a securities firm
and a Clearing Member of OCC, since July, 1997. From 1995 to 1997,
Mr. Pfinsgraff was an Executive Vice President and Chief Financial
Officer of Prudential Securities Incorporated, and he served as a Vice
President and Treasurer of Prudential Insurance Company from 1991 to
1995. His present term as a director of OCC expires in April, 2000.
WILLIAM A. ROGERS, age 60, 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 served as a director of the
National Association of Securities Dealers, Inc. from 1994 to 1997.
His present term as a director of OCC expires in April, 2000.
JOSEPH B. STEFANELLI, age 60, has been an Exchange Director of
OCC, representing the American Stock Exchange, LLC 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, 2000.
MELVIN B. TAUB, age 55, has been the Vice Chairman of the Board
of OCC since April, 1999 and a Member Director of OCC since 1996. Mr.
Taub has been a Senior Executive Vice President and Director of
Securities Operations and Information Services at Salomon Smith Barney
Inc., a securities firm and a Clearing Member of OCC, since 1991. Mr.
Taub served as a Director of the National Securities Clearing
II-3<PAGE>
Corporation from 1994 to 1998 and was its Chairman from 1996 to 1998.
He presently serves as a Director of The Depository Trust Company and
the Securities Industry Automation Corporation and is a member of the
NASDAQ Industry Advisory Committee. His present term as a director of
OCC expires in April, 2001.
NON-DIRECTOR EXECUTIVE OFFICERS
GEORGE S. HENDER, age 56, has been Management Vice Chairman of
OCC since 1997 and Chief Operating Officer since March 1999. He was
Senior Executive Vice President of OCC from 1990 to 1997.
PAUL G. STEVENS, JR., age 54, has been President of OCC since
1989. From 1989 to March 1999 he was Chief Operating Officer of OCC
and from 1994 to March 1999 was Treasurer and Chief Financial Officer
of OCC.
RALPH E. PFAFF, age 60, has been Executive Vice President and
Corporate Information Officer of OCC since 1984 and Treasurer and
Chief Financial Officer of OCC since March 1999.
ITEM 5. LEGAL PROCEEDINGS.
None.
ITEM 6. LEGAL OPINIONS AND EXPERTS.
The opinion of Schiff Hardin & Waite, Chicago, Illinois, counsel
to OCC, as to the legality of the securities being registered has been
previously filed as an exhibit to the Registration Statement.
The Consolidated Financial Statements of OCC as of December 31,
1998 and 1997, and for the years ended December 31, 1998, 1997, and
1996 included in this Post-Effective Amendment No. 1 to the
Registration Statement have been audited by Deloitte & Touche LLP,
independent auditors, as stated 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.
Set forth below are the audited statements of consolidated
financial condition of OCC and subsidiaries as of December 31, 1998
and 1997 and the related statements of consolidated income and
retained earnings and consolidated cash flows for each of the three
years in the period ended December 31, 1998.
II-4<PAGE>
STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
THE OPTIONS CLEARING CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years ended December 31 1998 1997
------------- --------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 28,333,427 $ 27,031,985
Accounts receivable 8,489,178 6,738,397
Exchange billing receivable NOTE 9 8,395,820 8,308,952
Due from participant exchanges NOTE 9 985,451 566,337
Other current assets 6,212,940 3,378,145
Deferred income taxes NOTE 10 835,925 1,278,001
-------------- --------------
Total Current Assets 53,252,741 47,301,817
-------------- --------------
Property and Equipment:
Data processing equipment, furniture, etc. 7,527,688 7,294,636
Building and leasehold improvements 4,510,924 5,175,342
-------------- --------------
Total property and equipment 12,038,612 12,469,978
Less accumulated depreciation and amortization (9,994,840) (10,316,372)
-------------- --------------
Property and equipment-net 2,043,772 2,153,606
Clearing fund deposits NOTE 4 1,294,185,000 980,779,000
Other assets 600,026 1,302,569
Deferred income taxes NOTE 10 1,176,930 887,138
-------------- --------------
Total Assets $1,351,258,469 $1,032,424,130
============== ==============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 2,692,319 $ 3,310,908
SEC fees payable 14,958,349 12,375,024
Income taxes payable 1,308,766 75,602
Refundable clearing fees NOTE 7 2,876,580 4,592,800
Exchange billing payable NOTE 9 8,395,820 8,308,952
Other accrued expenses 3,939,541 4,359,221
-------------- --------------
Total Current Liabilities 34,171,375 33,022,507
-------------- --------------
Clearing fund deposits NOTE 4 1,294,185,000 980,779,000
Commitments and contingent liabilities
NOTES 2, 3, 4, 8, 13
Shareholders' Equity: NOTE 5
Common stock 600,000 600,000
Paid-in capital 1,393,332 1,393,332
Retained earnings 21,575,428 17,295,957
-------------- --------------
II-5<PAGE>
Total 23,568,760 19,289,289
Less treasury stock (666,666) (666,666)
-------------- --------------
Total Shareholders' Equity 22,902,094 18,622,623
-------------- --------------
Total Liabilities and Shareholders' Equity $1,351,258,469 $1,032,424,130
============== ==============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
II-6<PAGE>
STATEMENTS OF CONSOLIDATED INCOME & RETAINED EARNINGS
THE OPTIONS CLEARING CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years ended December 31 1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
REVENUES:
Clearing fees NOTE 7 $ 56,840,415 $ 47,737,753 $ 48,890,851
Interest 5,601,015 4,862,071 2,982,415
Disclosure documents 742,642 771,529 457,392
Data processing fees and services 6,222,837 5,372,716 3,109,542
Other 5,398,360 2,885,940 2,530,692
------------ ------------ ------------
Total Revenues 74,805,269 61,630,009 57,970,892
------------ ------------ ------------
EXPENSES:
Employee costs 33,501,740 32,590,104 27,698,845
Data processing costs 12,630,284 13,027,316 12,842,707
Professional fees 6,020,196 4,165,662 2,043,847
General and administrative NOTE 9 9,881,029 7,220,794 7,357,265
Disclosure documents 543,654 539,045 345,885
Rental, other than data processing
equipment 4,127,319 3,518,610 3,520,423
Depreciation and amortization 705,968 422,612 817,016
------------ ------------ ------------
Total Expenses 67,410,190 61,484,143 54,625,988
------------ ------------ ------------
Income Before Income Taxes 7,395,079 145,866 3,344,904
Provision for Income taxes: NOTE 10
Federal - current 2,562,858 (342,807) 1,061,911
State and local - current 400,466 (15,064) 286,209
Federal - deferred 132,586 428,481 25,742
State - deferred 19,698 63,660 6,864
------------ ------------ ------------
Total Provision for Income Taxes 3,115,608 134,270 1,380,726
------------ ------------ ------------
Net Income
[Basic earnings per Class B
common share - 1998,
$213.97; 1997, $0.53;
1996, $78.56] NOTES 1 AND 5 4,279,471 11,596 1,964,178
Retained Earnings,
Beginning of Year 17,295,957 17,284,361 15,320,183
------------ ------------ ------------
Retained Earnings,
End of Year $ 21,575,428 $ 17,295,957 $ 17,284,361
============ ============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
II-7<PAGE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
THE OPTIONS CLEARING CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Years ended December 31 1998 1997 1996
---- ---- ----
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income $ 4,279,471 $ 11,596 $ 1,964,178
Adjustments to reconcile net
income to net cash flows
from operating activities:
Depreciation and amortization 705,968 422,612 817,016
Deferred income taxes 152,284 347,328 32,606
Loss on disposal of assets 84,864 -- --
Changes in assets
and liabilities:
Accounts receivable and other
receivables (2,256,763) (511,723) (2,428,472)
Other current assets (2,834,795) (1,626,698) 744,981
Accounts payable, accrued expenses
and other payables 1,631,924 7,555,944 1,214,707
Refundable clearing fees (1,716,220) 2,210,406 658,844
Income taxes payable 1,233,164 (75,655) (558,709)
------------ ----------- ------------
Net cash flows from operating
activities 1,279,897 8,333,810 2,445,151
------------ ----------- ------------
CASH FLOWS FROM
INVESTING ACTIVITIES
Capital expenditures (680,998) (605,630) (1,074,114)
Other-net 702,543 (967,426) 411,378
Net cash flows from investing ------------ ------------- ----------
activities 21,545 (1,573,056) (662,736)
------------ ------------- ----------
Net increase in cash
and cash equivalents 1,301,442 6,760,754 1,782,415
Cash and cash equivalents,
beginning of year 27,031,985 20,271,231 18,488,816
------------ ------------ ------------
Cash and cash equivalents,
end of year $ 28,333,427 $ 27,031,985 $ 20,271,231
============ ============ ============
Supplemental disclosure of
cash flow information:
Cash paid for income taxes $ 2,414,013 $ 867,408 $ 1,936,260
============ ============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
II-8<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
THE OPTIONS CLEARING CORPORATION AND SUBSIDIARIES
Years Ended December 31, 1998, 1997 and 1996
NOTE 1.
SUMMARY OF 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.
USE OF ESTIMATES The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
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
historical 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.
IMPAIRMENT OF LONG-LIVED ASSETS The Clearing Corporation reviews
long-lived assets for possible impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not
be recoverable. If such review indicates that the carrying amount of a
long-lived asset is not recoverable, the carrying amount is reduced to
the estimated recoverable value.
INCOME TAXES The Clearing Corporation uses the asset and
liability method, under which deferred tax assets and liabilities are
recorded based on differences between the financial accounting and tax
II-9<PAGE>
basis of assets and liabilities. Deferred tax assets and liabilities
are measured based on the currently enacted tax rate expected to apply
to taxable income in which the deferred tax asset or liability is
expected to be settled or realized.
EARNINGS PER SHARE Earnings per share are calculated based on
the weighted average number of Class B common shares outstanding
during the year; 20,000 shares in 1998, 21,666 in 1997 and 25,000 in
1996. The Clearing Corporation has no dilutive potential common shares
outstanding.
RECENT ACCOUNTING PRONOUNCEMENTS In 1998, the Accounting
Standards Executive Committee of the American Institute of Certified
Public Accountants issued Statement of Position ("SOP") 98-1,
Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use. SOP 98-1, which is effective January 1, 1999,
provides guidance on accounting for the costs of computer software
developed or obtained for internal use. The impact of SOP 98-1 to the
financial statements cannot be readily determined at this time.
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 preferred and common stocks, foreign
currency, 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, 1998. Of these
lines of credit, $930 million is available to ensure the performance
of the foreign currency settlement process in the event that a
Clearing Member should fail to deliver foreign currencies on a timely
basis; $150 million is available to reimburse OCC to meet any
suspension obligations or to reimburse itself for bankruptcy losses;
and $20 million is 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, 1998. These
lines of credit are utilized to ensure performance of the foreign
currency settlement process in the event that a Clearing Member should
II-10<PAGE>
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,
1998, 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 OCC
and ICC is not included in the statements of consolidated financial
condition.
NOTE 3.
MARGIN DEPOSITS
The rules and practices established by OCC 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
noncash 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 70% 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.
II-11<PAGE>
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 OCC and ICC, bank letters of credit are
required to be irrevocable except with the consent of acceptance by
OCC and ICC. Cash margin deposits which are held may be invested, and
any interest or gain received or loss incurred on invested funds
accrues to OCC and ICC. OCC's and ICC'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, 1998 for
the Clearing Corporation were approximately as follows:
<TABLE>
<CAPTION>
<S> <C>
----------------
Underlying securities at market value $ 9,285,446,000
Valued securities at market value 16,157,016,000
Cash and temporary investments 152,389,000
Bank letters of credit 7,053,785,000
Government securities deposited as margin
(at market value at date of deposit, which
approximates market value at December 31, 1998) 4,322,804,000
----------------
Total $ 36,971,440,000
================
</TABLE>
Further, as of December 31, 1998, 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 134,000 short index contracts. At December 31, 1998, the
market value of the index option contracts collateralized under the
escrow receipts program approximated $14.1 billion.
OCC also maintains cross-margining arrangements with certain U.S.
commodities clearing organizations, including ICC. Under the terms of
these arrangements, an OCC Clearing Member that is also a Clearing
Member of one or more commodities clearing organizations participating
in the cross-margining arrangement, or that has an affiliate that is a
Clearing Member of one or more such commodities clearing organizations
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
II-12<PAGE>
by OCC and the participating commodities clearing organization(s) 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(s). In the
event that either OCC or one or more participating commodities
clearing organization(s) suffers a loss in liquidating positions in a
cross-margin account, the loss is to be shared among OCC and the
participating commodities clearing organization(s) in accordance with
their agreement. 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.
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 prorata 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, OCC and ICC are 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 OCC and ICC with an immediately available pool of
liquid assets. Clearing Members may make clearing fund deposits in
cash to OCC and ICC or an approved segregated funds account, or in
Government securities to various securities depositories or banks.
Cash deposits in nonsegregated accounts may be invested and any
interest or gain received or loss incurred on invested funds accrues
to OCC and ICC. Cash in a segregated account is a demand deposit which
is held in the name of OCC and ICC, which names an individual Clearing
Member whose clearing fund obligation the deposit represents and which
can only be withdrawn by OCC and ICC. These segregated funds cannot be
invested by OCC and ICC. 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
II-13<PAGE>
securities are converted to U.S. dollars using the year-end exchange
rate) at December 31,1998 was as follows:
<TABLE>
<CAPTION>
<S> <C>
---------------
Cash and temporary investments $ 20,236,000
Segregated funds accounts 25,000
Government securities, at market value 1,273,924,000
---------------
Total $ 1,294,185,000
===============
</TABLE>
The clearing funds maintained by OCC and ICC were $1,293,766,000
and $419,000, 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 20,000
shares outstanding at December 31, 1998 and 1997. Treasury stock
comprises 10,000 shares of Class A common stock and 10,000 shares of
Class B common stock at a cost of $666,666. 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
II-14<PAGE>
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.
On or about April 28, 1997, The New York Stock Exchange ("NYSE")
exercised its right to sell its shares of OCC common stock to OCC. In
accordance with the terms of the Stockholders Agreement, the aggregate
purchase price of $333,333 is payable to the NYSE.
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, and among each participant and among
such participants.
NOTE 6.
SALE AND BUY BACK AGREEMENTS
Sale and Buy Back agreements outstanding, including amounts in
margin and clearing fund deposits, averaged $116 million and $100
million during 1998 and 1997, respectively, and the maximum amount
outstanding during 1998 and 1997 was $291 million and $351 million,
respectively. 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, 1998, 1997 and 1996 that refunds and discounts of
clearing fees be made to Clearing Members. Such refunds and discounts,
which have been netted against clearing fees in the statements of
consolidated income and retained earnings, amounted to $13,786,000,
$21,549,000 and $8,382,000 for the years ended December 31, 1998, 1997
and 1996, respectively.
NOTE 8.
COMMITMENTS
Future minimum rental payments under noncancelable operating
leases (principally for office space and data processing equipment) in
the aggregate in effect as of December 31, 1998 are as follows:
II-15<PAGE>
------------
1999 $ 4,774,000
2000 3,541,000
2001 3,111,000
2002 816,000
2003 958,000
------------
Total $ 13,200,000
Rental expense for the years ended December 31, 1998, 1997 and
1996 amounted to $11,558,000, $11,433,000, and $11,950,000,
respectively. Included in rental expense for 1998 is a $680,000 charge
for vacating certain office space.
Total minimum rentals to be received under noncancelable
subleases as of December 31, 1998 are $318,000. Rental income received
under subleases for the years ended December 31, 1998, 1997 and 1996
amounted to $347,000, $251,000, and $276,000, respectively.
The Clearing Corporation has employment agreements with certain
of its senior officers. The aggregate commitment for future salaries
at December 31, 1998, excluding bonuses, was approximately $1.05
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 $115,000, $110,000, and $102,000 were incurred for the
years ended December 31, 1998, 1997 and 1996, respectively.
OCC also bills and collects transaction fees for the Chicago
Board Options Exchange, Incorporated. Fees billed and uncollected at
December 31, 1998 and 1997 were $8,396,000 and $8,308,000,
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, 1998, 1997 and 1996 were $3,299,000, $2,070,000, and
$2,151,000, respectively. The Participant Exchanges' share of OIC
expenditures for the years ended December 31, 1998, 1997 and 1996 was
$1,678,000, $992,000, and $1,070,000, respectively. At December 31,
1998 and 1997, the amounts due from Participant Exchanges were
$985,000 and $566,000 respectively.
II-16<PAGE>
Transactions between OCC and shareholder exchanges and their
affiliates are settled by cash payments.
NOTE 10.
INCOME TAXES
The provision for income taxes is reconciled to amounts
determined by applying the statutory Federal income tax rate as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Years Ended December 31 1998 1997 1996
---- ---- ----
Federal income tax at the
statutory rates $ 2,588,278 $ 51,053 $ 1,170,716
Permanent tax differences 107,166 78,774 94,673
State income tax effect 400,466 48,596 186,036
Tax credits -- (40,000) (73,643)
Other 19,698 (4,153) 2,944
------------- ---------- -----------
Provision for income taxes $ 3,115,608 $ 134,270 $ 1,380,726
============= ========== ===========
</TABLE>
The deferred tax asset consists of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
December 31 1998 1997
---- ----
Compensation and employee benefits $ 639,415 $ 847,460
Other items 196,510 430,541
----------- -----------
Current asset 835,925 1,278,001
----------- -----------
Accelerated depreciation 791,319 662,637
Other items 385,611 224,501
Long-term asset 1,176,930 887,138
----------- -----------
Total $ 2,012,855 $ 2,165,139
=========== ===========
</TABLE>
NOTE 11.
RETIREMENT PLANS
The Clearing Corporation has a trusteed, noncontributory,
qualified 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
II-17<PAGE>
highest nonconsecutive three years out of the last ten years before
retirement. Effective January 1, 1998, the SERP was amended to include
a benefit replacement plan ("BRP") feature for certain named employees
whose qualified retirement plan benefits are limited by maximum pay
and maximum benefit limitations.
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
obligation of the plans. During 1998, the Clearing Corporation adopted
Statement of Financial Accounting Standards ("SFAS") 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." The
provisions of SFAS No. 132 revise employers disclosures about pensions
and other postretirement benefit plans.
Net periodic benefit cost consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Years Ended December 31 1998 1997 1996
------ ------- -------
Service cost $ 983,000 $ 793,000 $ 666,000
Interest cost 1,603,000 1,381,000 1,094,000
Expected return on assets (2,002,000) (1,385,000) (1,033,000)
Amortization:
Transition obligation 17,000 17,000 17,000
Prior service cost 217,000 133,000 133,000
Actuarial (gain) loss (2,000) 127,000 60,000
------------ ------------ ------------
Net periodic benefit cost $ 816,000 $ 1,066,000 $ 937,000
============ ============ ============
</TABLE>
Assets and liabilities for the Retirement Plan and the SERP/BRP
were measured as of September 30, 1998. The funded status as of
December 31, 1998 is the same as the funded status as of September 30,
1998.
The plans' benefit obligation, plan assets and funded status are
as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Years Ended December 31 1998 1997
---- ----
Change in Benefit Obligation:
Net benefit obligation at beginning of year $20,381,000 $16,616,000
Service cost 983,000 793,000
Interest cost 1,603,000 1,381,000
Plan amendments (503,000) 563,000
Actuarial loss 4,397,000 1,167,000
Gross benefits paid (247,000) (139,000)
----------- -----------
Net benefit obligation at end of year $26,614,000 $20,381,000
=========== ===========
Change in Plan Assets:
II-18<PAGE>
Fair value of plan assets at beginning of year $19,837,000 $13,923,000
Actual return on plan assets 121,000 4,089,000
Employer contributions 2,319,000 1,964,000
Gross benefits paid (247,000) (139,000)
----------- -----------
Fair value of plan assets at end of year $22,030,000 $19,837,000
=========== ===========
Years Ended December 31 1998 1997
---- ----
Funded Status:
Funded status at end of year $(4,584,000) $ (544,000)
Unrecognized net actuarial loss 6,877,000 598,000
Unrecognized prior service cost 250,000 968,000
Unrecognized net transition obligation 49,000 67,000
Fourth quarter contributions 1,863,000 273,000
----------- -----------
Net amount recognized - prepaid $ 4,455,000 $ 1,362,000
=========== ===========
Amounts recognized in the statement of financial
condition consist of:
Prepaid benefit cost $ 4,855,000 $ 1,654,000
Accrued benefit liability (826,000) (292,000)
Intangible asset 426,000 --
----------- -----------
Net amount recognized $ 4,455,000 $ 1,362,000
=========== ===========
</TABLE>
The accumulated benefit obligation and fair value of plan assets
for the pension plan with accumulated benefit obligations in excess of
plan assets (SERP/BRP) was $7,120,000 and $5,904,000; respectively, as
of September 30, 1998.
The major assumptions used to determine the obligations are a
6.75% discount rate and 4.75% future salary increases as of December
31, 1998 and 7.5% discount rate and 4.75% future salary increases as
of December 31, 1997. The expected long-term return on assets was 9.5%
for both 1998 and 1997.
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 the matching contributions to the plan for
the years ended December 31, 1998, 1997 and 1996 were $469,000,
$451,000, and $423,000, respectively.
II-19<PAGE>
NOTE 12.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Clearing Corporation has a Postretirement Welfare Plan
covering employees who meet specified age and service requirements.
Retiree contributions' to medical payments vary by age and service at
retirement. The plan is a defined dollar benefit plan in which the
Clearing Corporations' obligation is limited to a maximum amount per
participant set by the Clearing Corporation at the time a participant
retires. Effective January 1, 1998, the plan has established a 401(h)
account to fund retiree welfare benefits. Benefits for all
participants, excluding key employees, will be funded through the
401(h) account, to the extent allowed under the regulations.
Net periodic benefit cost consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Years Ended December 31 1998 1997 1996
---- ---- ----
Service cost $ 46,000 $ 39,000 $ 33,000
Interest cost 68,000 63,000 42,000
Amortization:
Transition obligation 28,000 28,000 28,000
Actuarial gain -- -- (12,000)
--------- --------- ---------
Total net periodic benefit cost $ 142,000 $ 130,000 $ 91,000
========= ========= =========
</TABLE>
Assets and liabilities for the postretirement benefit plan were
measured as of September 30, 1998. The funded status as of December
31, 1998 is the same as the funded status as of September 30, 1998.
II-20<PAGE>
The plans' benefit obligation, plan assets and funded status are
as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Years Ended December 31 1998 1997
---- ----
Change in Benefit Obligation:
Net benefit obligation at beginning of year $ 881,000 $ 797,000
Service cost 46,000 39,000
Interest cost 68,000 63,000
Plan amendments 1,125,000 --
Actuarial loss 143,000 15,000
Gross benefits paid (43,000) (33,000)
----------- ----------
Net benefit obligation at end of year $ 2,220,000 $ 881,000
Change in Plan Assets:
Fair value of plan assets at beginning of year $ -- $ --
Employer contributions 43,000 33,000
Gross benefits paid (43,000) (33,000)
----------- ----------
Fair value of plan assets at end of year $ -- $ --
Funded Status:
Funded status at end of year $(2,220,000) $ (881,000)
Unrecognized net actuarial (gain) loss 76,000 (67,000)
Unrecognized prior service cost 1,125,000 --
Unrecognized net transition obligation 393,000 421,000
Fourth quarter contributions 223,000 8,000
----------- ----------
Net amount recognized accrued $ (403,000) $ (519,000)
=========== ==========
Amount recognized in the statement of financial
condition consist of:
Accrued benefit liability $ (403,000) $ (519,000)
</TABLE>
The assumed discount rate used in determining the accumulated
postretirement benefit obligation was 6.75% in 1998 and 7.5% in 1997.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit was 7% in 1998 decreasing by 1
percentage point per year until 2001.
A one percentage point increase in the assumed health care cost
trend rate for each year would not have a material effect on the
accumulated postretirement benefit obligation or net postretirement
health care cost.
II-21<PAGE>
NOTE 13.
CONTINGENCIES
In the normal course of business, the Clearing Corporation may be
subjected to various lawsuits and claims. At December 31, 1998, 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.
II-22<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, 1998 and 1997 and
the related consolidated statements of income and retained earnings
and of cash flows for each of the three years in the period ended
December 31, 1998. 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, 1998 and 1997 and the results of
their operations and their cash flows for each of the three years in
the period ended December 31, 1998 in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Chicago, Illinois
January 29, 1999
II-23<PAGE>
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.
II-24<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has duly caused this Post-Effective
Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of
Chicago, State of Illinois on March 31, 1999.
THE OPTIONS CLEARING CORPORATION
By: /s/ Wayne P. Luthringshausen
-------------------------------------
Wayne P. Luthringshausen
Chairman and Principal
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement has been
signed by the following persons in the capacities set forth below on
March 31, 1999.
/s/ Wayne P. Luthringshausen /s/ Robert M. Greber
-------------------------------- --------------------------------
Wayne P. Luthringshausen, Robert M. Greber, Director
Chairman and Principal Executive
Officer
/s/ Ralph E. Pfaff /s/ M. Blair Hull
-------------------------------- --------------------------------
Ralph E. Pfaff, M. Blair Hull, Director
Principal Financial and
Accounting Officer
/s/ W. Gordon Binns, Jr. /s/ Edward J. Joyce
-------------------------------- --------------------------------
W. Gordon Binns, Jr., Director Edward J. Joyce, Director
/s/ Douglas J. Engmann /s/ Martin Pfinsgraff
-------------------------------- --------------------------------
Douglas J. Engmann, Director Martin Pfinsgraff, Director
/s/ Freddy Enriquez /s/ William A. Rogers
-------------------------------- --------------------------------
Freddy Enriquez, Director William A. Rogers, Director
II-25<PAGE>
/s/ William C. Floersch /s/ Harvey Silverman
-------------------------------- --------------------------------
William C. Floersch, Director Harvey Silverman, Director
/s/ Meyer S. Frucher /s/ Joseph B. Stafanelli
-------------------------------- --------------------------------
Meyer S. Frucher, Director Joseph B. Stefanelli, Director
/s/ Melvin B. Taub
--------------------------------
Melvin B. Taub, Director
POWER OF ATTORNEY
-----------------
Each person whose signature appears above authorizes Wayne
P. Luthringshausen, or George S. Hender, or James C. Yong, severally,
to execute in the name of each such person, and file, any amendments
to this Registration Statement necessary or advisable to enable the
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.
II-26<PAGE>
EXHIBIT INDEX
-------------
The following documents are filed as 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)*
23.3 Consent of Wayne W. Fieldsa
23.4 Consent of William Gangi
23.5 Consent of Dorcas R. Hardy
23.6 Consent of John C. Harris**
23.7 Consent of Timothy R. Mullen
24 Power of Attorney (included on the
signature page to this Post-Effective
Amendment No. 1 to the Registration
Statement)
* Previously filed.
** To be filed by later
amendment.
II-27
EXHIBIT 23.1
------------
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the use in this Post-Effective Amendment No. 1
to Registration Statement No. 333-48897 on Form S-20 of The Options
Clearing Corporation of our report dated January 29, 1999, 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
March 31, 1999
EXHIBIT 23.3
------------
CONSENT OF WAYNE W. FIELDSA
---------------------------
The undersigned hereby consents to being named, in the
Registration Statement on Form S-20 of The Options Clearing
Corporation, as about to become a director of The Options Clearing
Corporation.
Dated: March 31, 1999
/s/ Wayne W. Fieldsa
------------------------------
Wayne W. Fieldsa
EXHIBIT 23.4
------------
CONSENT OF WILLIAM GANGI
------------------------
The undersigned hereby consents to being named, in the
Registration Statement on Form S-20 of The Options Clearing
Corporation, as about to become a director of The Options Clearing
Corporation.
Dated: March 31, 1999
/s/ William Gangi
------------------------------
William Gangi
EXHIBIT 23.5
------------
CONSENT OF DORCAS R. HARDY
--------------------------
The undersigned hereby consents to being named, in the
Registration Statement on Form S-20 of The Options Clearing
Corporation, as about to become a director of The Options Clearing
Corporation.
Dated: March 31, 1999
/s/ Dorcas R. Hardy
------------------------------
Dorcas R. Hardy
EXHIBIT 23.7
------------
CONSENT OF TIMOTHY R. MULLEN
----------------------------
The undersigned hereby consents to being named, in the
Registration Statement on Form S-20 of The Options Clearing
Corporation, as about to become a director of The Options Clearing
Corporation.
Dated: March 31, 1999
/s/ Timothy R. Mullen
------------------------------
Timothy R. Mullen
