Feb. 4, 2024
To Whom it May Concern, My name is Christopher M. Bitara, I am a US citizen who participates in our financial markets. The SR-OCC-2024-001 rule introduces a series of concerning risks that warrant immediate attention. Firstly, the presence of redacted details obstructs a thorough public review, hindering valuable feedback essential for informed decision-making. The proposal's classification of all Clearing Members as "Too Big To Fail," regardless of their risk management practices, poses a substantial threat to the stability of our financial system. This classification overlooks the nuanced nature of risk management within the market, potentially undermining the effectiveness of regulatory measures. Moreover, the rule places blame on U.S. regulators without acknowledging the broader issue of market participants exploiting positions, such as engaging in excessive naked shorting, which goes beyond regulatory concerns. The role of the Financial Risk Management Officer adds another layer of concern, as the management of conflicting interests may compromise the impartiality of risk assessment. Additionally, the proposal's approach of reducing margin requirements to shield Clearing Members raises alarms, as it could heighten risks for both the OCC and the broader financial system. The numerous changes in control settings over a short period cast doubt on their consistency and necessity, further exacerbating uncertainties surrounding the rule. Furthermore, the proposal's impact on OCC's pre-funded financial resources is worrisome, potentially exposing it to financial risks that may have broader implications. The resulting uneven playing field, where Clearing Members benefit from reduced margin requirements at the expense of other participants, is a concerning aspect of the rule. Lastly, the illogical reduction of margin requirements for at-risk Clearing Members contradicts the established risk management framework of the OCC, introducing potential vulnerabilities to the financial system. Addressing these issues is crucial for maintaining the integrity and stability of our financial markets. To fortify our financial markets in response to the challenges presented by the SR-OCC-2024-001 rule, a primary recommendation is to strengthen risk management. This entails a rigorous increase and enforcement of margin requirements, curbing the potential for excessive risk-taking by Clearing Members. By bolstering these measures, we can ensure a more resilient and stable financial system, better equipped to navigate uncertainties. A pivotal modification to the Loss Allocation waterfall is proposed, prioritizing Clearing fund deposits of non-defaulting firms over OCC's pre-funded financial resources. This strategic adjustment seeks to safeguard the overall stability of the financial system while enhancing the allocation of losses in a manner that aligns with the best interests of market participants and stakeholders. To instill an additional layer of accountability and transparency, the introduction of external auditing and supervision as a "fourth line of defense" is suggested, with findings subjected to public reporting. This measure aims to enhance scrutiny, ensuring that the rule not only remains effective but also aligns with established best practices, fostering trust within the financial ecosystem. Moreover, it is recommended to fortify oversight mechanisms by actively involving regulatory bodies during periods of heightened market volatility. This collaborative approach enhances responsiveness and adaptability, crucial in navigating the dynamic nature of financial markets. By engaging regulatory bodies, we can better ensure that the rule remains resilient in the face of evolving challenges. It is my sincerest hope that these aforementioned issues regarding the OCC’s rule proposal and my suggestions to improve our financial markets are not taken lightly. Kind regards, Christopher M. Bitara BSN, RN