Feb. 4, 2024
To whomever it may concern, I am writing to comment on the proposed rule change by the Options Clearing Corporation (OCC) to adjust parameters for calculating margin requirements during high volatility. As a household investor who is interested in a transparent and fair capital market, I appreciate the opportunity to provide some comments on this proposal. The proposed rule appears to protect risky and over-leveraged financial positions from margin calls during periods of high market volatility. Margin calls exist as a protective measure to cover potential losses when the value of their positions fall below a threshold. By restricting or preventing margin calls, this allows investors with undervalued positions to avoid making necessary adjustments in their investment strategies. Making risk management mechanisms more lax will increase the number of risky positions and the severity of the leverage. This could destabilize the market on a macro scale. Furthermore, the proposal raises a red flag with the role of the Financial Risk Management (FRM) Officer. The proposal makes this individual responsible for safeguarding OCC's interests. However, this may be a conflict of interest because OCC's interest may not always align with the broader market's interests. It is important to ensure the FRM Officer implements measures that do not shelter bad, risky, or over-leveraged positions to spread throughout the market. This must be done in a way that aligns with the broader market's interests, not OCC's. To conclude, as an interested household investor, I am committed to fostering a transparent and stable financial environment. I trust the SEC will agree with my views as well to ensure proper risk management procedures are in place to ensure market integrity. Sincerely, Will S.