Feb. 12, 2023
Dear SEC, I am writing to voice my concerns regarding SR-OCC-2022-012. As a retail investor who is dedicated to protecting the rights of retail investors in stock trading, I believe that this proposal poses significant risks to market stability and the interests of retail investors. First and foremost, I am against the changes proposed in SR-OCC-2022-012. The proposed changes would result in fixed collateral haircuts that are less accurate in representing potential fluctuations in asset values, particularly in light of the proposed Historical Value-at-Risk model, which excludes significant periods of market stress such as the 2008 Global Financial Crisis. Furthermore, replacing the STANS model, which has been in use since 2006, with a similar model that is based on "average" scenarios ignores the possible long-tail risks that could arise in the future, as we have seen with the 2008 Global Financial Crisis. It is imperative that margin calculations consider the impact of long-tail risks in order to ensure the OCC can properly manage those risks. Instead of eliminating or lowering third-party credit rating requirements, the OCC should take into account the lowered credit worthiness of Clearing Members and Clearing Banks by increasing margin and capital requirements. Additionally, the proposed changes to reduce external audit, supervision, and credit ratings introduce weaknesses into risk management models and could lead to more banking scandals, failures, and bankruptcies. This is inconsistent with the recommendations outlined in the BIS paper on "four lines of defense". Lastly, I strongly object to the significant redactions in the exhibits of this proposal, which limit public review and comment. This undermines the principles of transparency and accountability in the regulation of stock trading and should be considered grounds for rejection of the proposal. In conclusion, I strongly urge the SEC to reject SR-OCC-2022-012 in its current form, as it poses significant risks to market stability and the interests of retail investors. Thank you for your time and consideration. Sincerely, Kristoffer Svendsen