Feb. 5, 2024
Dear Security Exchange Commissions, As a retail investor I appreciate the opportunity to comment on decisions that will impact the financial markets that I participate in. I will take this opportunity to express the concerns I have with the proposed rule change from the options clearing corporation. This rule is about how the margin requirements are calculated during times of high volatility. I do not support an adjustment of this process as I believe it impedes a fair, clear and transparent market for all. I implore you to listen to my reasoning and reconsider. I believe the proposed rule, SR-OCC-2024-001 will inadvertently give protection to financial institutions who have made risky financial decisions during times of high volatility. When adjusting margin requirements based off of volatility the function of normal risk management mechanisms, like margin calls, is impaired. Financial institutions should be prepared for all situations including high volatility. An ineffective mechanism in place for managing high risk and the recent rules implemented concerning “idiosyncratic risk” on market conditions makes me feel that instead we need more strict margin call requirements, not looser ones. I grow concerned about the amount of risky and unstable positions that are going unchecked. Another concern I have is a conflict of interests regarding the Financial Risk Management Officer. Their job is to protect the OCC’s interests and it should be considered that those interests may not always align with that of the broader markets obligation to be fair and transparent. In fact this proposal acknowledges that there are scenarios , like in times of high volatility, where risk factor coverage varies significantly when dealing with idiosyncratic risks. This shows a need for further evaluation. In addition to these concerns , I would like to mention the lack of transparency in the redacted materials accompanying the proposal. Without transparency there is no trust and I believe it is a disservice to us all to damage the trust we investors and the public have in the fairness of our markets. I believe that the redacted nature of the documents impairs our ability to evaluate the effectives of this new proposal and would like to see a more detailed version. In regards to the aforementioned issues, I would like to suggest revisiting the OCC’s loss allocation framework. I also propose that the clearing funds deposits of non-defaulting firms be prioritized over the OCC’s pre funded financial resources. To conclude, I am an active and attentive investor who is following closely to the rules and regulations being proposed. I am committed to creating a financial environment that prioritizes the well-being of all market participants and is fair. I trust that the SEC will carefully consider these concerns during the rule making process and make the appropriate changes that will help promote fairness and protect our markets integrity. Sincerely, Hiett, B. Sent with Proton Mail secure email.