Feb. 3, 2024
Dear Securities and Exchange Commission, I'm astounded by the Options Clearing Corporation's (OCC) latest proposal to modify margin requirement calculations during market volatility peaks. As an investor prioritizing market stability and fairness, this proposal seems counterproductive at best. The proposal ostensibly aims to manage risk but paradoxically seems to protect risky bets during volatile times, undermining the very essence of margin calls as a risk management tool. This approach could lead to an escalation in unchecked risks, endangering long-term market stability. Furthermore, assigning significant responsibility to the Financial Risk Management (FRM) Officer, tasked with protecting OCC's interests, introduces a glaring conflict of interest with the broader market's health. The lack of transparency, highlighted by the redacted proposal materials, only deepens my concerns, limiting our ability to scrutinize and discuss the proposal's merit openly. Despite OCC's intentions, their approach could inadvertently favour bad investments. I suggest revisiting the loss allocation framework to prioritize non-defaulting Clearing Members' deposits, ensuring a fairer, more resilient market structure. Additionally, introducing independent reviews and enhancing transparency could mitigate conflicts of interest and foster trust in our financial systems. In essence, while the proposal aims to safeguard against volatility, it risks doing the opposite. I urge a comprehensive reevaluation to ensure it aligns with the principles of market integrity and fairness. Sincerely, Jay Boychuk