Feb. 5, 2024
To whom it may concern, I wish to comment on the most recent proposed rule change from the Options Clearing Corporation (OCC) regarding margin requirements during periods of high volatility (file number SR-OCC-2024-001). It is my understanding that this rule change is designed to prevent the over-estimation of the margin requirements of firms caused by periods of high volatility. However, I believe this rule change will only lead to the frequent under-estimation of these same margin requirements during periods of high volatility. Margin requirements in the first place are set to ensure these more risk-attracted firms don't over-leverage themselves, especially during times of high volatility. With reduced margin requirements, it is likely that these firms will have an incentive to increase the leverage on their positions. After all, with higher leverage comes the higher reward for bearing risk, and with the additional risk of market volatility increasing their margin requirements removed, these firms will gladly replace it with the risk of increased leverage instead. These margin requirements are absolutely necessary to maintain control over the amount of leverage firms choose to use. Furthermore, this rule is directly against the best interests of retail investors. With softened margin requirements, the massive advantage that firms have over retail investors in the market will only increase, furthering the separation between firms and retail investors in wealth, power, influence, and profitability. If the SEC is concerned at all with promoting fairness in the market, they cannot in good faith support this rule. It is heavily recommended that the SEC oppose this rule to maintain the fairness and integrity of the market as a whole. Please feel free to contact me if you have any questions or concerns regarding my opinion on this matter, or the opinions of other retail investors in general. We are not the dumb money: just the money most often overlooked. Sincerely, A very concerned investor, Bennett Langevin Get Outlook for iOS