Feb. 12, 2023
Hi, As an individual investor, I am against this proposal. There are so many issues with it. First, the change to fixed collateral haircuts less accurately represent potential fluctuations in asset values especially with the proposed Historical Value-at-Risk model, because the example history excludes significant periods of market stress (including the 2008 Global Financial Crisis). Replacing the STANS model in use since 2006 with one that is similar on "average" under "typical" scenarios ignores possible long tail risks, like the 2008 Global Financial Crisis. Margin calculations should consider the possible impact of long tail risks so that the OCC can properly manage those risks. Given the history of its STANS margin calculation method with Monte Carlo simulations, the OCC should consider modifying the current CiM approach to incorporate potential long tail risks. Eliminating and/or lowering third party credit rating requirements increases risk to the OCC and is a horrible proposal. Instead, the OCC should take into consideration lowered credit worthiness with commensurate increases in margin and capital requirements. Failing to require and incentivize Clearing Members and Clearing Banks to properly manage risk is simply unacceptable after the Global Financial Crisis. Consistent with this BIS paper regarding "four lines of defense", proposed changes to reduce external audit, supervision, and credit ratings introduces weaknesses into Risk Management models allowing more banking scandals, failures, and bankruptcies to occur. It is also improper that the exhibits to this proposal are nearly completely redacted which significantly limits public review and comment. Proposals with significant redactions prevent public review and comment and this proposal should be rejected on that basis alone. The OCC needs to do a better job at overseeing the Clearing Members and Banks, and this proposal does not do any of that. In fact, it promotes and incentivizes more risk taking. Once again, this proposal should NOT be considered. Thanks, Jean Garcia-Gomez