Feb. 3, 2024
I am writing to express my 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 that this proposed modification warrants thorough reconsideration due to its potential impact on market stability, lack of transparency, and inherent conflicts of interest. Reducing margin requirements during times of high volatility only creates an illusion of stability and hides systemic risks. Transparency is paramount in maintaining investor confidence. Unfortunately, the redacted materials accompanying the proposal lack sufficient detail to allow informed analysis. As stakeholders, we deserve complete visibility into the OCC’s decision-making process. I request that the SEC demand unredacted information, enabling market participants to assess the proposed changes comprehensively. Transparency fosters trust and ensures that all parties can make informed decisions. The role of the Financial Risk Management (FRM) Officer is pivotal in safeguarding market integrity. However, the proposed rule change raises concerns about potential conflicts of interest. By allowing the FRM Officer to adjust parameters, we risk compromising the independence of risk assessment. The broader market’s well-being hinges on prudent risk management practices. Reducing margin requirements during volatile periods only serves to hide systemic risk and allows poor investments to fester. It's time for bad positions to be closed, not covered.