Feb. 14, 2023
This is an e-mail to the Securities and Exchange Commission regarding the proposal SR-OCC-2022-012. To put things short I am against this proposal as a retail investor. 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. Consistent with this BIS paper regarding "four lines of defense", proposed changes to reduce external audit, supervision, and credit ratings introduce weaknesses in Risk Management models allowing more banking scandals, failures, and bankruptcies to occur. Most importantly, proposals with significant redactions prevent public review and comment and this proposal should be rejected on that basis alone. As stated on your own website in the About section - "For more than 85 years since our founding at the height of the Great Depression, we have stayed true to our mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation." Please continue to stand by your mission statement, and protect investors, and reject redacted proposals behind closed doors. I appreciate you taking the time to read this, Best Regards, John