Under the arrangement, OCC will provide central counterparty clearing and settlement through its Stock Loan Program for State Street’s Prime Services platform, which offers custody-based securities lending solutions to investors.
The move extends OCC’s clearing services to a major global custodian bank for the first time.
Oberon Knapp, managing director of strategy and head of securities finance at OCC, commented that State Street’s decision demonstrated the value central clearing can bring to custody-based services.
He highlighted capital efficiency benefits, noting that OCC’s qualifying central counterparty status can deliver around 95% risk-weighted asset savings compared with uncleared securities lending.
OCC’s clearing model guarantees the value of lent shares and posted collateral, helping to mitigate counterparty credit risk and allowing clearing members to allocate more resources to core activities.
Brendan Eccles, global head of Prime Services at State Street, said becoming an OCC clearing member was a strategic step reflecting the growing importance of central clearing within securities finance.
He added that the relationship strengthens capital efficiency within State Street’s custody-based Prime Services model while broadening client access to securities lending opportunities.
OCC currently operates two securities lending programmes: the Stock Loan/Hedge Program, where trades are executed bilaterally, and the Market Loan Program, where trades are executed anonymously.
In both, OCC acts as principal counterparty, positioning itself between lenders and borrowers to manage risk and settlement.
