Feb. 4, 2024
Hi there, As a Canadian household investor, the changes proposed in SR-OCC-2024-001 by the Options Clearing Corporation (OCC) to adjust margin requirements cause concern for the legitimacy of American capital markets and may have broader implications for the overall market. Here are some potential impacts I am concerned about: Risk of Complacency: While the rule is designed to mitigate risks during volatile periods, it could lead to a sense of complacency among market participants. If institutions believe that they have more leeway with margin requirements, they might underestimate the risks they are taking, which could lead to larger systemic risks in the long term. Potential for Larger Future Corrections: If the rule allows institutions to delay addressing problematic positions, it could contribute to the build-up of risks in the financial system. This might lead to larger corrections in the future, as unresolved issues and imbalances eventually need to be addressed. We have already seen that institutions are not addressing problematic positions and already have a build-up of risks that they cannot unwind (including a certain "idiosyncratic risk" in the market) and a further erosion of the rules will only allow for continued malfeasance. I hope that the SEC review of SR-OCC-2024-001 will come to the conclusion that preventing this change will be of overall benefit to all investors, as the current rules force institutions to ensure they hold sufficient capital at ALL times, and don't get to use exceptions during times of high-volatility. Household investors do not create high volatility, only institutions do. If they are creating the problem, they should not get a "hall pass" to ride through the problems they created. Markets are meant to serve and protect the businesses and people that are using them for investment and raising capital. They are not meant to benefit the financial institutions that continually break the rules that they create, then change those rules when they've broken them beyond their ability to operate legally. Please do not allow the authorization of SR-OCC-2024-001. Yours truly, A Concerned Household Investor Michael MacPherson