Feb. 7, 2024
Dear Honorable Publicly Employed Regulators , I am writing to express my deep concerns regarding the proposed rule change, Rule SR-OCC-2024-001, by the Options Clearing Corporation (OCC), which seeks to adjust parameters for calculating margin requirements during periods of high market volatility. As a concerned participant in the financial markets, I believe it is imperative to voice apprehensions regarding the potential consequences of such alterations. First and foremost, the proposed rule change raises significant apprehensions about its potential impact on market stability. Margin requirements play a crucial role in maintaining market integrity by ensuring that market participants have sufficient collateral to cover their positions. By reducing margin call requirements and providing the OCC extensive authority to adjust margin thresholds based on undisclosed parameters during periods of high market volatility, there is a risk of exacerbating market instability at a time when stability should logically be of the highest concern. This could potentially lead to heightened systemic risk and increased volatility, negatively impacting market participants and investors alike. Furthermore, the lack of transparency surrounding the undisclosed parameters used by the OCC to adjust margin thresholds is deeply troubling. Transparency is fundamental to fostering trust and confidence in the financial markets. Without clear and transparent guidelines regarding the factors considered in adjusting margin requirements, market participants are left in the dark, unable to adequately assess and mitigate their risks. This opacity undermines the integrity of the market and hampers efforts to promote fair and efficient trading practices. Moreover, the proposed rule change raises concerns about the inherent conflict of interest associated with the role of the Financial Risk Management (FRM) Officer. The OCC's FRM Officer is tasked with overseeing risk management practices, including the determination of margin requirements. However, granting the OCC extensive discretion to adjust margin thresholds without clear guidelines or oversight raises questions about the impartiality and independence of the FRM Officer's role. This potential conflict of interest undermines the credibility of risk management practices and erodes trust in the OCC's regulatory framework. In light of these concerns, I urge SEC and any other Relevant Regulatory Body to thoroughly reconsider the proposed rule change and to prioritize transparency, risk mitigation, and the broader market's well-being. It is essential to ensure that any changes to margin requirements are based on clear, objective criteria that are transparent to market participants. Additionally, robust oversight and accountability mechanisms must be implemented to safeguard against potential conflicts of interest and to uphold the integrity of the financial markets. Thank you for considering my concerns regarding Rule SR-OCC-2024-001. I remain committed to advocating for policies that promote market stability, transparency, and investor protection. Sincerely, Steven Bonner