OCC Proposes Risk Control Measures for Crypto ETP Positions

The Options Clearing Corporation (OCC) has proposed new risk control measures for spot cryptocurrency Exchange-Traded Product (ETP) positions, according to Foresight News. The proposal, detailed on the SEC's official website, aims to implement Specific Wrong-Way Risk (SWWR) controls when clearing members or their affiliates act as custodians. In such scenarios, the valuation of related fund shares and options will be set to zero to mitigate credit exposure arising from crypto asset custody risks. Additionally, the OCC plans to cease accepting letters of credit and Government-Sponsored Enterprise (GSE) debt securities as eligible collateral.