AQS Clearing Members

AQS Clearing Members are Clearing Members of the Options Clearing Corporation (OCC).

There are two types of Clearing Members:

General Clearing Members (CM) provide market access and clearing services to Non-Clearing Members (NCM) for whom they sponsor.
Competitive Liquidity Providers (CLP) are Clearing Members who borrow and lend for their own account and do not sponsor market access or clearing services for NCMs.

	Definition	Documentation		Actions		Credit Relationship
	Provide Market Access to NCMs	OCC Membership	CM Subscriber Agreement (CMSA)	Borrow/Lend for Proprietary Accounts	Sponsor NCM Access	OCC	NCM
CM	•	•	•	•	•	•	•
CLP		•	•	•		•

Benefits for Clearing Members

Improved Capital Treatment and Margin

For Clearing Members, AQS virtually eliminates both the web of bilateral credit arrangements that currently defines and strictly limits who can transact with whom and the credit risk associated with over-the-counter transactions.

Reduction in Systemic Risk

Lenders that may have resisted over-the-counter trading models may re-enter a more formal, auditable trading environment, increasing overall liquidity. Margin requirements are imposed on both borrowing and lending Clearing Members, who in turn have margin agreements with their underlying Non-Clearing Member clients. These risk-based margin requirements are fundamentally more conservative than typical over-the-counter margin conventions; however, through portfolio–based margin calculations, a Clearing Member is able to reduce their net margin to optimal levels.

Improved Access and Transparency

AQS is available to the entire universe of lenders and borrowers, providing all market participants with equal access to the price discovery process and market liquidity. Centralized price discovery generates consolidated market data that is available to the investing public and can be used to inform investment decisions.

Outsourced Technology Solution

AQS will continually make its best effort to design and update its systems to allow for automated compliance with all relevant rules and regulations whenever possible. AQS provides a standardized, auditable source of securities lending transactions for Clearing Members and their sponsored Non-Clearing Member clients.

Product Differentiation

AQS represents a new and powerful direct market access product for Clearing Members to offer their borrowing and lending clients. Improved automation and facilitation of straight-through-processing by AQS allows Clearing Members to rely on a centralized infrastructure to broaden their electronic product offering.

Clearing Member Services

Edwin Connelly
212.370.5648
econnelly@quadriserv.com