Feb. 9, 2024
I emphatically say “NO” to the proposed rule SR-OCC-2024-001 because it doesn’t help in any risk control. It just temporarily contains it and adds to it in the long term, thereby creating a greater systemic risk in the future. This also encourages bad behavior as it encourages more people to stay in the high risk area because they know if these criteria laid out by SR-OCC-2024-001 are met, they will be saved and will play riskier bets. Instead of this rule, simply update margin requirements to need more collateral. In your own document, you say there is an expected 99% shortfall, which means every single one of them will be margin called. To drop that from 99% to maybe 5% or 10%, you should be required to deposit more collateral to lower this expected shortfall amount; not let them off the hook because they have too much expected shortfall. The OCC has shown in the past they have not abused this authority, so there is no reason to pass rule SR-OCC-2024-001 when a more appropriate response is to lower the 99% expected shortfall by demanding more collateral. Please DO NOT allow SR-OCC-2024-001 to pass. Thank you, Kevin Hudson