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"Transformation" Underway at OCC

Bill Raczyk, Vice President-Process Innovation, The Options Clearing Corporation (OCC)
Bill Raczyk, Vice President-Process Innovation, The Options Clearing Corporation (OCC)

Bill Raczyk, Vice President-Process Innovation, The Options Clearing Corporation (OCC)

The word ‘transformation’ is getting a lot of use these days. It started with various consulting firms, then caught on in a big way throughout all industries. It seemed if you were not involved in ‘digital transformation’, then you were about to be disrupted.

In reality, ‘transformation’ is a term used for a practice that has been going on for ages. Within each organization and industry there is a constant need for re-invention; whether it is strategic or tactical in scope. Many organizations have developed continuous improvement programs that keep re-invention as a primary focus. At OCC, the world’s largest equity derivatives clearing organization, we started making process improvements in a very tactical manner in 2015. Today, we have embarked on a strategic, enterprise-wide effort that will then transition into a continuous improvement practice.

We started making use of workflow automation in 2015 using Appian, a low-code development platform. Since that time, we have automated 19 processes and recently added task execution using robotic process automation (RPA). These improvements have been successful in driving improved transparency, enhanced traceability, and reduction of human error risk, but those efforts to-date have been very targeted in scope. With a recent decision to launch our Renaissance Initiative, which will modernize OCC’s risk management, clearing and data systems, we are taking on a much broader scope with a renewed emphasis on customer service, agility, and efficiency.

The first question we are tackling within our effort is ‘why’. It seems simple enough, but we are looking at each process, each business capability, and answering the question of why they exist. Other questions will follow, such as whom does that process serve and what information or data does the process consume, improve andthen pass on. The answers to these questions will allow us to (re-)design processes based on how we want to deliver value going forward. Those process designs will then drive requirements for the new core clearing system as well as other tools, such as the workflow products we already have in place.

The re-invention effort will not be a simple undertaking. Many of our processes and the controls within the organization have been the product of the inflexibility of our existing core clearing system, which is now 20 years old. While the existing system delivers quality each day and has proven it can handle record trading volume (in 2018 OCC cleared on average 21 million contracts a day), enhancements to the system are increasingly difficult. User-developed applications, double verification, and other accommodations were put in place to ensure quality from the system and the data within it. Procedures were built to support those inefficiencies. Our new process design effort will question those embedded practices and challenge our colleagues to identify system functionality that will deliver the same quality of work with the utmost efficiency and agility in mind.

This represents a significant shift in our organizational mindset. We are tackling this challenge by leveraging both a top down and bottom up approach. The message from the top is to increase our efficiency while increasing value to the users of the U.S. exchange-listed options market. The bottom up work is at the very foundation of how we deliver value. We are focusing on not only how automation will deliver more useful and actionable information, but we are also challenging the existing department structures to determine the clearest path to getting work done.

Workflow is not only about lining up tasks with people; it is the alignment of people with information, which again is a response to why a process exists. People need data to get work done, then they pass that enriched data to another process or entity, either internally or externally. Developing an awareness of who or what uses that data next and for what purpose provides a richer background for decisions within each process step.

Tearing down long-standing structures is never easy. Through a focus on driving greater operational and capital efficiencies to the users of our markets, process redesign, an open mindset, and greater access to data, my colleagues at OCC will be empowered to achieve the agility and resiliency goals we have set.

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