Bradley Porter
February 2, 2024
Subject: Comments on SR-OCC-2024-001 34-99393 File No. SR-OCC-2024-001] Concerns Regarding Proposed Rule Change by the Options Clearing Corporation (OCC)
Dear [SEC/Relevant Regulatory Body],
I am writing to express my deep concerns regarding the proposed rule change by the Options Clearing Corporation (OCC) to adjust parameters for calculating margin requirements during periods of high market volatility. As a concerned market participant, I believe it is imperative to address the potential impact of this rule change on market stability, the lack of transparency in redacted materials, and the inherent conflict of interest associated with the Financial Risk Management (FRM) Officer's role.
Firstly, the proposed rule change has the potential to significantly impact market stability. Margin requirements play a crucial role in ensuring the financial soundness of market participants and mitigating systemic risks. By adjusting these parameters during periods of high market volatility, there is a risk of introducing additional uncertainty and exacerbating market fluctuations. This could have far-reaching consequences, not only for individual investors but also for the broader market as a whole.
Furthermore, the lack of transparency surrounding the redacted materials is deeply concerning. Transparency is a fundamental pillar of fair and efficient markets. The redaction of crucial information raises questions about the integrity and accountability of the rule-making process. As a market participant, I believe it is essential to have access to complete and unredacted information to make informed decisions and contribute to the overall stability and integrity of the market.
Additionally, the inherent conflict of interest associated with the Financial Risk Management (FRM) Officer's role is a cause for concern. The FRM Officer is responsible for overseeing risk management practices within the OCC. However, the proposed rule change grants the FRM Officer the authority to adjust margin calculation parameters. This creates a conflict of interest, as the FRM Officer may be influenced by the OCC's financial interests rather than solely focusing on ensuring robust risk management practices. This conflict undermines the credibility and effectiveness of the risk management framework and raises questions about the OCC's commitment to maintaining a fair and transparent market.
In light of these concerns, I respectfully urge [SEC/Relevant Regulatory Body] to thoroughly reconsider the proposed rule change. It is crucial that the regulatory body prioritizes transparency, risk mitigation, and the broader market's well-being. To address these concerns, I recommend the following actions:
1. Conduct a comprehensive review of the potential impact of the proposed rule change on market stability. This review should involve soliciting feedback from market participants, conducting independent analyses, and considering the long-term implications of the rule change.
2. Enhance transparency by providing full access to all relevant materials and redacted information. Market participants should be able to understand the rationale behind the proposed rule change and have the opportunity to provide meaningful input based on complete information.
3. Address the conflict of interest associated with the FRM Officer's role by establishing an independent oversight mechanism for margin calculation parameter adjustments. This mechanism should ensure that decisions are made in the best interest of market stability and risk management, free from conflicts of interest.
By taking these steps, [SEC/Relevant Regulatory Body] can demonstrate its commitment to maintaining a fair, transparent, and stable market. I believe that thorough reconsideration of the proposed rule change is necessary to safeguard the interests of all market participants and the broader financial system.
Thank you for considering my concerns. I trust that [SEC/Relevant Regulatory Body] will carefully evaluate the potential implications of the proposed rule change and prioritize the well-being of the market and its participants. I am available should you require any further information or clarification.
Yours sincerely,
Bradley Porter