Feb. 5, 2024
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the recent filing SR-OCC-2024-001, which proposes alterations to the margin requirements by the Options Clearing Corporation (OCC). After careful consideration, I believe that granting the OCC the discretion to modify certain parameters for computing margin requirements during periods of heightened volatility may not serve the market's best interests. The existing framework for margin requirements serves as a fundamental safeguard, ensuring that clearing members adequately manage and mitigate risk. By adhering to these well-established guidelines, members are compelled to maintain financial discipline, thus upholding market integrity. The proposed modifications suggest an approach where parameters could be adjusted, potentially to prevent specific members from facing a margin call during turbulent market times. This could inadvertently encourage a complacent attitude towards risk assessment and management among clearing members. It is imperative to recognize that if a clearing member defaults due to inadequate risk preparedness, it reflects a fundamental oversight in their risk management strategy. Altering or relaxing margin requirements to accommodate such scenarios does not address the root cause but rather masks the symptoms. This could inadvertently lead to market manipulation, as members might operate under the assumption that the safety net of adjusted requirements will shield them from the repercussions of excessive risk-taking. Furthermore, the ability of the OCC to adjust margin requirements might create a false sense of security among clearing members, prompting them to engage in riskier ventures, under the belief that margin calls can be circumvented. Such a dynamic could erode the market's stability, contrary to the claims of increased stability put forth in the proposal. In conclusion, while the intention to enhance market resilience is commendable, the approach of modifying margin requirements could have unintended consequences that might compromise market integrity and stability. It is crucial to maintain stringent and consistent margin requirements to foster a disciplined and risk-aware market environment. I urge the Commission to consider these concerns carefully before proceeding with the approval of SR-OCC-2024-001. Very respectfully, Justin Hosford Investor