Feb. 13, 2024
I appreciate the chance to comment on SR-OCC-2024-001 regarding proposed rule changes by The Options Clearing Corporation (OCC) related to margin requirement adjustments during periods of high market volatility. My concerns lie with the lack of transparency in the OCC's rule proposal, exemplified by extensive redactions hindering public review and comment. Transparency is vital, especially considering the systemic importance of the OCC in our financial system. The proposal suggests reducing margin requirements to mitigate risks faced by Clearing Members during volatile periods. However, this approach seems to favor Clearing Members at the expense of other market participants, including retail investors, who must bear the brunt of long-tail risks. Furthermore, the proposal introduces a conflict of interest for the Financial Risk Management (FRM) Officer, potentially undermining the OCC's ability to protect against market risks effectively. To address these concerns, I propose: Enforcing margin requirements commensurate with the risks associated with Clearing Member positions, rather than reducing them, to discourage excessive risk-taking and reliance on idiosyncratic controls. Rearranging the OCC's Loss Allocation waterfall to prioritize Clearing fund deposits of non-defaulting firms before OCC's own pre-funded financial resources. This shift would incentivize Clearing Members to monitor each other's risk management and bolster protection for the OCC and the public against potential bailouts. Thank you for considering these suggestions. Sincerely, A Concerned Retail Investor.