The Options Clearing Corporation (OCC) is a central clearinghouse and regulator for listed options traded in the United States. Founded in 1973, OCC has become one of the most important players in the U.S. financial markets, providing an essential service to ensure that buyers and sellers are protected from risk while trading options contracts on exchanges like CBOE, NYSE Arca, Nasdaq BX and PHLX. By acting as a guarantor between two parties engaging in option trades—the buyer/seller pair—OCC helps reduce counterparty risk by guaranteeing that all obligations will be met should either party default on their end of the transaction agreement; this is especially important when dealing with large sums of money or high-risk investments such as derivatives trading which can involve significant amounts leverage or margin requirements..In addition to its role as a clearinghouse for option transactions within U.S.-based exchanges, OCC also provides regulatory oversight over these activities under both SEC (Securities Exchange Commission)and CFTC (Commodity Futures Trading Commission). Through its surveillance program it monitors market activity to detect any potential manipulation schemes or other fraudulent practices taking place amongst traders who use listed options instruments for their transactions; if necessary they may take disciplinary action against firms found guilty of such violations including fines & suspensions from further participation within regulated markets . The organization also works closely with various industry organizations like ISDA & FIA to promote greater transparency & integrity across global derivatives markets through initiatives related standards development , best practices guidance etc., so that investors have confidence knowing they’re participating within fair& secure environment where their interests are always being safeguarded first priority..Overall , it’s clear why The Options Clearing Corporation plays such an integral role maintaining orderly functioning our nation's capital markets -- ensuring investors have peace mind when entering into agreements involving complex derivative products without having worry about falling victim shady dealings unscrupulous operators seeking exploit loopholes existing regulations . It serves not only protect those actively involved day-to-day operations but ultimately benefit entire economy through fostering healthy atmosphere trustworthiness cooperation among participants at all levels investment process.
