Feb. 5, 2024
Dear SEC, I am writing to convey our significant concerns regarding the proposed rule change by the Options Clearing Corporation (OCC) regarding the adjustment of parameters for calculating margin requirements, especially during periods of high market volatility. Our apprehensions stem from two primary sources. Firstly, the potential unintended consequences, including the shielding of risky positions during volatile market conditions, raise serious questions about the overall stability of the market. Secondly, the inherent conflict of interest in the role of the Financial Risk Management (FRM) Officer adds an additional layer of concern. The lack of transparency, particularly due to redacted materials accompanying the proposal, further compounds these worries by limiting a comprehensive understanding of the potential implications. The significance of risk management mechanisms, such as margin calls, cannot be overstated in maintaining market stability. Our evaluation of the proposal raises concerns about its potential to undermine these mechanisms, leading to unchecked risk exposure. It is crucial to adjust parameters in a manner that strikes a delicate balance between risk management and the broader interests of the broader market. In light of these concerns, we recommend a thorough reassessment of the loss allocation framework, giving priority to Clearing Fund deposits over the OCC's pre-funded resources. Additionally, we propose the implementation of an independent review mechanism to ensure an impartial evaluation of control settings. Advocating for enhanced transparency measures, such as providing non-confidential summaries of redacted materials, will facilitate a more comprehensive and informed decision-making process. Strengthening oversight mechanisms and incorporating public input in decision-making processes will contribute to increased accountability. We stress the importance of collaborative efforts with stakeholders to establish industry-wide standards and best practices, fostering long-term market stability. Public accessibility to stress testing results is vital to demonstrate the effectiveness of risk management measures. In conclusion, we reiterate our commitment to cultivating a financial environment that prioritizes fairness and transparency. We express confidence in the SEC's ability to thoroughly consider the concerns raised during the rulemaking process. Thank you for your attention to this matter. We appreciate the regulatory body's dedication to upholding a resilient and secure financial system. Sincerely, Me and every other concerned individual investor