Feb. 4, 2024
Securities and Exchange Commission Please consider my concerns about the posed risks and issues with the SR-OCC-2024-001 proposal: 1. Redacted details hinder a comprehensive public review, fairness, ?and valuable feedback. 2. 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. 3. The proposal implies regulatory shortcomings, yet the actual problem extends to market participants exploiting positions, such as engaging in excessive naked shorting, surpassing regulatory concerns. 4. 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 of relying on one individual to manage conflicting interests may compromise impartial risk assessment and management. 5. The proposal seeks to shield Clearing Members by reducing margin requirements, potentially heightening risks for both the OCC and the broader financial system. 6. Over 200 instances of "idiosyncratic" control settings in less than four years raise concerns about consistency and necessity. 7. The proposal's impact on OCC's pre-funded financial resources is a source of worry, potentially exposing it to financial risks. 8. Rule creates an uneven playing field as Clearing Members consistently benefit from reduced margin requirements, putting other participants at a disadvantage. 9. Reducing margin requirements for at-risk Clearing Members is illogical and contradicts the OCC's established risk management framework. Please consider these suggestions to help improve our financial markets: 1. Increase and enforce margin requirements to prevent excessive risk-taking. 2. Modify the Loss Allocation waterfall, prioritizing Clearing fund deposits of non-defaulting firms over OCC's pre-funded financial resources. 3. Introduce external auditing and supervision as a "fourth line of defense" with public reporting. 4. Strengthen oversight mechanisms, actively involving regulatory bodies during heightened market volatility. 5. Establish industry-wide standards and best practices for consistent risk management. 6. Provide clearer guidelines for idiosyncratic controls, preventing misuse with a structured evaluation framework. 7. Emphasize enhanced transparency requirements in reporting and decision-making. 8. Advocate for public accessibility of stress testing results, showcasing effectiveness and building trust. 9. Incorporate public input through consultations and hearings, fostering inclusivity. 10. Consider establishing an external oversight committee for impartial evaluation and scrutiny. I appreciate your consideration of these details and encourage you to strive for rules that address appropriate risk management and market integrity for the true benefit of all. Christine Williams Retail Investor