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OneChicago Achieves Milestone In No Risk Dividend Product - Exchange Marks Second Year Anniversary Of OCX.NoDivRisk® Which Offers Over 1,450 Underlying Equities

Date 29/10/2012

OneChicago, LLC (OCX), the only U.S. equity finance exchange, today celebrates the second-year anniversary of the OCX.NoDivRisk product that eliminates the dividend risk, revealing its true nature – an exchange traded equity finance product.

OCX.NoDivRisk is the only exchange listed equity derivative product that allows traders to hold equity exposure without dividend variation risk. Most exchange traded equity derivatives products account for expected dividends by discounting the current price of the contract by the present value of the expected future distribution. If the actual distribution does not equal the expected value that was priced in, then unexpected losses will follow. The OCX.NoDivRisk contract eliminates this variation risk.

From its launch in Q4 2010, OCX.NoDivRisk has grown to 59% of the Exchange Future for Physical (“EFP”) volume, 44% of the block volume and 46% of the open interest.

“The dividend risk is removed as we adjust the OCX.NoDivRisk contract’s prior night’s settlement on the morning of ex-date by the then known actual dividend amount. This adjustment is done without any pay/collect cycle between the long and short parties,” said David Downey, CEO, OneChicago. “Removing the dividend risk allows market participants to trade without worry of how dividend changes could affect their holdings.”  

An EFP transaction utilizing the OCX.NoDivRisk contract is a pure interest rate trade, equivalent to an OTC equity swap such as an equity repo or stock lending transaction; the very transactions that Dodd Frank envisions moving to exchanges and clearinghouses

Firms looking to trade on better financing and leverage terms with an upgrade of their counterparty exposure to a AA+ entity, the OCC, and those entities that will soon to be affected by pending Basel III capital constraints will find the products attractive.

For more information on OCX.NoDivRisk, please visit:

http://www.onechicago.com/?page_id=3583