Feb. 7, 2024
Dear, SEC I hope this email finds you well. I am writing to express my concerns regarding the proposed rule change and to offer specific recommendations aimed at addressing these concerns. Introduction: The proposed rule change raises several significant concerns, including the potential unintended consequences of shielding risky positions during volatile market conditions. Additionally, there is a notable conflict of interest inherent in the role of the Financial Risk Management (FRM) Officer, which warrants further examination. Furthermore, the lack of transparency due to redacted materials accompanying the proposal is troubling. Evaluation of Risk Management Mechanism: Risk management mechanisms like margin calls play a crucial role in maintaining market stability. However, there is concern that the proposed rule change may undermine these mechanisms, leading to unchecked risk exposure. It is essential to adjust parameters in a way that balances risk management with broader market interests. Specific Recommendations: I recommend reassessing the loss allocation framework to prioritize Clearing Fund deposits over the OCC's pre-funded resources. Additionally, implementing an independent review mechanism would ensure impartial evaluation of control settings. Additional Safeguards and Modifications: Enhanced transparency measures, such as providing non-confidential summaries of redacted materials, are crucial. Strengthening oversight mechanisms and incorporating public input in decision-making processes would further enhance accountability. Industry-wide standards and best practices should be upheld to promote market stability. Industry-Wide Standards and Best Practices: Collaboration with stakeholders is essential to establish industry-wide standards and best practices. Public accessibility to stress testing results would demonstrate the effectiveness of risk management measures. Conclusion: I am committed to fostering a financial environment that prioritizes fairness and transparency. I trust in the SEC's ability to thoroughly consider the concerns raised during the rulemaking process. Thank you for your attention to this matter. Sincerely, Seth Woodman