Feb. 7, 2024
Thank you for letting me comment on the OCC's proposed rule change about adjusting margin requirements during high volatility. I strongly disagree with this proposal and don't think it should be approved. My main worry is that it lacks transparency, making it hard for the public to understand and give meaningful feedback. This could lead to an unfair advantage for certain market players, especially retail investors, who may face more risks without proper margin requirements. The OCC says it needs these special margin reduction procedures to prevent a domino effect of defaults among Clearing Members, which could harm the OCC financially. But I believe Clearing Members should face the consequences of not managing their risks properly, rather than being repeatedly bailed out by reducing their margin requirements. This proposal also creates a conflict of interest for the Financial Risk Management Officer, who is supposed to protect the OCC's interests but may end up protecting failing Clearing Members instead. This undermines the purpose of collecting margin collateral to cover market risks. Furthermore, the proposal seems illogical because it aims to reduce margin requirements while also worrying about potential liquidity problems for non-defaulting Clearing Members. This contradicts the primary protection mechanism, which is the margin deposits of the suspended firm. To address these concerns, I suggest increasing and enforcing margin requirements based on the risks Clearing Members face, rather than reducing them. This would encourage Clearing Members to manage their portfolios better and discourage them from becoming "Too Big To Fail." Ultimately, this would protect the OCC and minimize the need for bailouts. In summary, I oppose this proposal and urge for it to be revised to address the issues I've raised. E-MAIL CONFIDENTIALITY NOTICE: The information transmitted in this e-mail and any attachments are for the sole use of the above individual(s) or entities to which it is addressed, and may contain proprietary, PRIVILEGED and/or highly CONFIDENTIAL information and exempt from disclosure under applicable law. Any unauthorized dissemination, review, distribution or copying of these communications is strictly prohibited. If this e-mail has been transmitted to you in error, please notify the sender immediately and delete the original message from your system. You are prohibited from copying, distributing, or using the information. Thank you for your cooperation. 1633709699