Feb. 7, 2024
To Chairman Gensler and the distinguished members of the rule committee: Thank you for the opportunity to comment on the above referenced OCC rule proposal entitled "Proposed Rule Change by the Options Clearing Corporation Concerning its Process for Adjusting Certain Parameters in its Proprietary System for Calculating Margin Requirements During Periods When Products It Clears and the Markets it Serves Experience High Volatility." As an individual investor with several years of market experience, I have grave concerns with the proposal as currently written and I whole-heartedly oppose its approval. As responsible adults, we often find ourselves instilling certain "life lessons" into those in our care. Whether those are our children, nieces and nephews, friends, customers, strangers, students, or otherwise, one such "life lesson" that I strive to instill is accountability for one's actions. I find that such accountability is noticeably lacking in the current wall street and broader market environment. This is likely the reason for such Clearing Members playing fast and loose within the established framework, and then putting pressure on certain fiduciaries, such as the OCC to modify said framework when it suits the Clearing Members purposes. The current rule proposal appears designed to protect Clearing Members from realizing the risk of its own costly trades, to the detriment of the individual investors, the broader market, and the Options Clearing Corporation itself. There are analyses and rules in place to define the margin required on a given stock and the same should be re-visited if the OCC sees a specific issue at hand. This will allow the Clearing Member transparency to know what they are getting themselves into from the outset and to weigh the cost-benefit of such an action knowing what that margin requirement is. However, to institute a rule as proposed here that ostensibly removes any set margin requirement for the benefit of a Clearing Member that otherwise "got in over its head," seems to avoid accountability and punish those on the opposite side of said risky bet. A more transparent and straightforward way to accommodate the OCC's apparent purpose here is to not grant deferential authority to remove margin requirements at a whim (and thus hurting many to protect the few), but instead to institute margin requirements at more appropriate levels that better protect and secure the broader market from a Clearing Member's actions - by setting margin limits more appropriate for a given security's potential volatility, and, again, requiring that Clearing Member to ensure that they can meet the same in periods of low, normal, and high market volatility, which are all bound to occur at some point. Accountability to those within our charge - I hope that you espouse the same. I am also concerned with the lack of transparency in the proposed rule. Several exhibits are heavily redacted, thus preventing the public at large from accurately assessing the full breadth, scale, and impact of this proposed rule. Based on what we are able to see, this rule is NOT in the best interest of myself, other individual investors, or the public at-large. In summary, the chief concern I have is that the Clearing Members are taking gambles that could impact the broader market, but then are given a "get out of jail free" card in place of being held accountable for their actions all in the name of avoiding a cascade effect on other Clearing Members. However, these same Clearing Members risk becoming over-leveraged and under-capitalized - which is not your or my fault, yet the proposed rule does not address that systemic problem, instead looks to create an infinite loop of the same, i.e. place risky bets and get off the hook. For the reasons stated above, the proposed rule should be rejected in its current state and the entirety of the proposed rule and its exhibits in an unredacted state should be made available to the public for transparent review and consideration. I appreciate the opportunity to comment on this matter and I hope that the SEC will reject this rule in favor of its mission for a fair, transparent, and resilient market. Sincerely, William Martin, Esq. -- William G. Martin, Esq.