The OCC & the ODD
The Options Clearing Corporation issues, guarantees, and clears all listed options, eliminating counterparty risk; the Options Disclosure Document (ODD) must be delivered to customers at or before account approval for options trading.
Expect the exam to make you separate who guarantees the trade from who polices the account: the OCC is the central counterparty that guarantees performance, but it does not judge suitability, set customer margin minimums, or write sales-practice rules — those belong to FINRA, Reg T, and the firm’s options principal. A favorite item gives an account-approval timeline and asks what triggers a violation; the tell is the ODD’s timing, which keys to approval, never merely “before the first trade.” Watch the redelivery trap too: when the OCC amends the ODD, existing approved customers must also receive it — typically no later than the next confirmation in that options category (some banks oversimplify this to “all customers immediately”).
Do not confuse this OCC (a clearing corporation) with the Office of the Comptroller of the Currency, the federal bank regulator — same letters, unrelated bodies. Because the OCC stands behind each contract, exercising (see Exercise & Assignment) never hinges on the original writer’s credit.
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