Feb. 4, 2024
To Whom it May Concern: I am a household investor writing to you about the proposed Options Clearing Corporation rules for calculating margin requirements. I strongly oppose the changes proposed in rule SR-OCC-2024-001. The proposal seeks to shield clearing members by reducing margin requirements, potentially heightening risks for both the OCC and the broader financial system. Higher margin requirements effectively limit excessive leveraging and ensure that the OCC stays well capitalized in case of clearing member defaults. This rule would create a more uneven playing field as clearing members consistently benefit from reduced margin requirements, putting other market participants at a disadvantage. Designating clearing members, even those poorly managing risks, as essentially "Too Big To Fail," risks the stability of the financial system and incentivizes more aggressive leveraging and looser risk management. Reducing margin requirements for at-risk clearing members elevates systemic risk and goes against the OCC's risk management framework. For these reasons, I suggest the following: - Enforce the existing margin requirements and seriously considering increasing them to prevent excessive risk-taking. - Modify the Loss Allocation waterfall to prioritize Clearing fund deposits of non-defaulting firms over OCC's pre-funded financial resources. - Add additional oversight mechanisms to involve regulatory bodies, especially in times of high market volatility. - Additional transparency requirements in reporting and decision-making - Make stress testing results publicly and timely available. All market participants, including household investors, deserve access to information about market risk. Thank you for your consideration and taking the time to read my concerns, which are shared by many who don't go through the effort of voicing them. Sincerely, Jyri Hukkataival