Feb. 7, 2024
Regarding SR-OCC-2024-001 34-99393, titled “Adjusting Margin Requirements in High Volatility,” I strongly oppose this proposal due to concerns about transparency, fairness for market participants, and the inherent conflicts of interest it presents. Transparency is crucial in financial regulations. However, this proposal lacks transparency as critical details are redacted, hindering public review and meaningful commentary. Therefore, it should be rejected. The proposed rule unfairly favors Clearing Members by repeatedly reducing their margin requirements, exposing retail investors to undue risk. Clearing Members should face strict margin requirements like other investors to ensure fairness in the marketplace. Furthermore, the proposal creates a moral hazard by treating Clearing Members as “Too Big To Fail,” incentivizing risky behavior. Instead, Clearing Members should bear the consequences of their actions, promoting responsible risk management. The conflict of interest within the Financial Risk Management Officer's role is concerning. The officer is tasked with protecting OCC’s interests but may be compelled to shield Clearing Members from failure, undermining market stability. This conflict must be addressed to ensure the OCC's integrity. Moreover, the proposal contradicts OCC's own risk management procedures, potentially exposing it to financial risks. Mitigating margin requirements reduces OCC's primary protection—margin collateral—making it illogical and nonsensical. To address these issues, margin requirements should be increased and strictly enforced based on the risks associated with Clearing Member positions. This approach encourages responsible risk management and prevents undue market influence by Clearing Members. In conclusion, this proposal should be rejected unless significant amendments are made to address transparency, fairness, conflicts of interest, and alignment with OCC's risk management procedures. Warm regards, Brett Mercer Founder & CEO SmartSocials ? Email: SmartSocials@yahoo.com ? Phone: 256-691-1108 Elevate your social presence with SmartSocials!