Aug. 11, 2022
August 11, 2022 I am a member of the investing public and I just became aware of OCC filing SR-0CC-2022-803. In proposal #1, OCC is attempting to use non-member sources (e.g. pension funds and insurance companies) to pay off debts in case of a Clearing Member default. This proposal is reckless and impetuous. If a Clearing Member screws up, then the current OCC members should be responsible for cleaning up the mess. Bailing out the offending member by tapping into resources outside the OCC rewards the offending Clearing Member for risky behavior. The only way to stop excessively risky behavior is to let the offending Member fail (and have the remaining members pay off their debts.) This places the responsibility on policing risky behavior back on the OCC members. These requested changes are harmful to the US markets. The only entities that benefit from these proposals are the Clearing Members that engage in excessively risky (or illegal) activities. It allows bailouts for risky actions instead of letting the cheating entities fail. Entities that engage in excessively risky or illegal activities must suffer the financial and criminal consequences for their behavior, otherwise the risky/illegal behavior will continue unabated. In order to protect the illusion that the US markets are fair, the SEC is morally obligated to deny SR-OCC-2022-803 in its entirety.