Feb. 2, 2024
Dear Securities and Exchange Commission, I am reaching out to share my perspective as an individual investor regarding the proposed rule change by the Options Clearing Corporation (OCC) on adjusting margin requirement parameters during volatile markets. While I appreciate that the intent is to mitigate risks, I have some reservations that certain aspects of the proposal may inadvertently jeopardize stability and fairness down the road. In particular, restricting margin calls seems concerning, as this risk management tool typically helps rein in dangerous exposure when positions drop in value. Without this protection, imprudent risks could potentially swell unchecked and create larger losses. I understand the desire to avoid exacerbating volatility, but also worry this approach could enable excessive speculation. Perhaps an independent analysis of the potential market impact would help identify a balanced solution. Additionally, the broad discretion granted to the Financial Risk Management Officer gives me pause. While this role is meant to protect OCC, their interests may not always align with the overall market's wellbeing. The acknowledgment that control settings could significantly sway outcomes highlights the potential for conflicts here. Greater transparency through disclosure of redacted materials could help assure investors of balanced decision-making. Moreover, the current loss allocation framework also seems to place undue burden on non-defaulting Clearing Members. I believe realigning the sequence so that their deposits are utilized prior to OCC’s own reserves would more fairly distribute risks and costs. In summary, I hope the Commission will take a thorough look at enhancing oversight, transparency and structural alignments within this proposal. My wish is to see markets operate with integrity and resilience. I appreciate your consideration of this perspective and welcome any opportunity for further public discussion. Please do not hesitate to contact me if I can provide any other input on this issue. Thank you for your time and the work you do to protect investors like myself. Sincerely, Ray Payne. Sent from Mail for Windows