Feb. 11, 2024
Thank you for the opportunity to comment on SR-OCC-2024-001 34-99393. Entitled "proposed rule change by The Options Clearing Corporation concerning its process for adjusting certain parameters in its proprietary system for calculating margin requirements for periods of high volatility. I have many concerns about the OCC rule proposal. I highly opposethis proposal, and do NOTsupports its approval. I'm concerned with the lack of transparency in our financial system as evidence by this rule proposal along with supporting information are significantly redacted which prevents public review, making it impossible for the public to meaningfully review and comment on this proposal, and this proposal should be rejected on this basis alone. Per the OCC this rule purposal and these special margin reduction procedures exist because a single clearing member defaulting could result in a cascade of clearing member defaults potentially exposing the OCC to financial risk. This clearing memberswho fail to properly manage their portfolio risk against long tail events become de facto to big to fail. For this reason, the rule proposal should be rejected clearing members should have the consequences of failing to properly manage their portfolio risk, including against long-tail events. Clearing member failure is a natural disincentive against excessive leverage and insufficient capitalization as others in the market will not cover their losses. In the light of the issues outlined above, please consider the following modification. Increase and enforce margin requirements commensurate with risks associated with clearing member positions instead of reducing margin requirements. Clearing members should be encouraged to position their portfolios to account stressed market conditions and long-tail risk. This rule purposal currently encourages clearing members to become too big to fail in order to pursue the OCC with excessive risk and leverage into implementing idiosyncratic controls more often to privatize profits and socialize losses.