Feb. 4, 2024
The SEC has lost all credibility and its incestuous connection with organized crime will be exposed sooner rather than later. Just the TORCHLIGHT..METAMATERIAL.. NextBridge...MMTLP (Scandle) alone should be enough to scrap FINRA and begin the process of prosecution. Yet here we are with SR-OCC-2024-001. A crock of bull excrement designed to protect bad market participants, bad bets, naked shorting, FTD's . .creating an incentive for too bad, to big to fail behavior. Redacted details hinder a comprehensive public review and valuable feedback. The proposal reads to designate Clearing Members, even those poorly managing risks, as de facto "Too Big To Fail," risking the stability of the financial system. The proposal's blame on U.S. regulators implies regulatory shortcomings, yet the actual problem extends to market participants exploiting positions, such as engaging in excessive naked shorting, surpassing regulatory concerns. The role of the Financial Risk Management (FRM) Officer presents a conflict, as they are tasked with safeguarding both OCC's interests and at-risk Clearing Members. This concentration of responsibility raises concerns, as relying on one person to manage conflicting interests may compromise impartial risk assessment and management. The proposal seeks to shield Clearing Members by reducing margin requirements, potentially heightening risks for both the OCC and the broader financial system. Over 200 instances of "idiosyncratic" control settings in less than four years raise concerns about their consistency and necessity. The proposal's impact on OCC's pre-funded financial resources is a source of worry, potentially exposing it to financial risks. Rules create an uneven playing field as Clearing Members consistently benefit from reduced margin requirements, putting other participants at a disadvantage. Reducing margin requirements for at-risk Clearing Members is considered illogical and contradicts the OCC's established risk management framework. How to fix the problem: Simple Punish bad behavior Increase and enforce margin requirements to prevent excessive risk-taking. Modify the Loss Allocation waterfall, prioritizing Clearing fund deposits of non-defaulting firms over OCC's pre-funded financial resources. Introduce external auditing and supervision as a "fourth line of defense" with public reporting. Strengthen oversight mechanisms, actively involving regulatory bodies during heightened market volatility. Establish industry-wide standards and best practices for consistent risk management. Provide clearer guidelines for idiosyncratic controls, preventing misuse with a structured evaluation framework. Emphasize enhanced transparency requirements in reporting and decision-making. Advocate for public accessibility of stress testing results, showcasing effectiveness and building trust. Incorporate public input through consultations and hearings, fostering exclusivity. Consider establishing an external oversight committee for impartial evaluation and scrutiny. Sincerely Brian Dozier