Aug. 01, 2022
August 1, 2022 As the Commission is hopefully well aware, options contracts can carry significant risk. The OCC, despite its insulation from this risk in ordinary day-to-day operation, is nevertheless exposed to this risk in extraordinary circumstances. Paradoxically, these are precisely the circumstances in which the OCC seeks to benefit from access to cash from sources whose risk appetite should clearly be incompatible with this level of risk exposure. In the notice, the OCC admits that \"in response to increased stressed liquidity demands\" in 2021 alone, it already had to increase the Cash Clearing Fund Requirement \"from $3.5 billion to $4 billion in July 2021, and from $4 billion to $5 billion in October 2021\". Despite the already systemic magnitude of this risk, rather than attempt to enact limits on its participants to draw down the OCC's aggregate risk exposure, they are instead seeking to expose more parties to this risk. If ever there was a bigger red flag than having to increase the Cash Clearing Fund Requirement by that much, it is being unable to pare down their members' risk exposure. In addition, options clearing corporations are uniquely exempted within UCC 8-504 from the duty to maintain financial asset. Between this and the above admissions of financial stress, it would be extremely irresponsible of the Commission to approve the OCC expanding their sphere of risk to also put at risk products such as pension funds. The risk profile that investors expect from their pension funds is NOT that of a stressed options counterparty. The Commission is hereby on notice that approval of this filing would be a clear and eminent dereliction of the Commission's duty towards pension fund holders and other investors of similar risk appetites.