Feb. 5, 2024
Dear Securities and Exchange Commission, I am writing to express concerns about the proposed rule change by the Options Clearing Corporation (OCC) regarding margin requirement calculations during high market volatility. Thank you for the opportunity to share my insights. The proposed rule (SR-OCC-2024-001), seeking to formalise margin threshold calculations, raises concerns for me. By formalising the adjustment of margin requirements based on market conditions, it may hinder the normal risk management mechanism of margin calls, which hinders the original intent of how and why these measures were created and revised previously. A notable concern is the role of the Financial Risk Management (FRM) Officer, creating a potential "fox guarding the hen house" situation in safeguarding OCC's interests over broader market well-being. I also wish there was better transparency in redacted materials accompanying the proposal limits so we can evaluate the system's effectiveness better. To address these concerns, I propose including additional safeguards that contain an independent review mechanism to assess control settings' impact and enhanced transparency requirements. Other refinements to the proposed rule include prioritising enhanced transparency, strengthening oversight mechanisms, incorporating public input, establishing industry-wide standards, and advocating for public accessibility of stress testing results. In conclusion, I do not support the approval of proposed rule change SR-OCC-2024-001. as I do not think this will help in creating a financial environment prioritising fairness, transparency, and the well-being of all market participants. Sincerely, Brett