Feb. 13, 2024
Dear Securities and Exchange Commission of the Untied States of America, Thank you for this opportunity to comment on SR-OCC-2024-001, since there is an absence of opportunity for external input from the Options Clearing Corporation (OCC). The lack of transparency is very alarming, especially regarding margin threshold calculations. There is a substantial lack of specific details on how parameters in the OCC systems are determined in times of high market volatility. This produces potential risks associated with granting unchecked and bias authority to the OCC Financial Risk Manager during periods of market stress. It is very concerning that the Financial Risk Managers Officer's role may lead to rubber-stamping margin reductions, impacting OCC resilience. I will further explain in detail, and am expressing this comment to offer solutions to address the flaws in both the proposal and the broader systemic issues that require dire attention and evaluation, I urge the SEC to revalue the rule as a whole and not just the proposed changes. There is a lack of transparency in the market as a whole. Due to the extensive redaction of supporting information this makes it impossible for the public to fully review and comment on rule proposals. For example, there are 205 pages of redacted details of how margin thresholds will be calculated. It is extremely important for the public to review, especially considering how the OCC's critical role as a Systemically Important Financial Market Utility (SIFMU). Clear and well0defined guidelines are essential for maintain market confidence and preventing abuse. In the section titled "Clearing Agency's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others" where it explicitly asserts, " Written comments were not and are not intended to be solicited with respect to the proposed change." The OCC neglects transparency and accountability by refusing to actively seek comments, leaving the public uninformed about crucial financial market operations. It is critical for active engagement with stakeholders to understand the potential impacts, and soliciting comments is essential for effective governance in a financial market utility. Transparency safeguards against potential abuse of control settings, and transparent processes and stakeholder engagement are crucial for regulatory decisions' legitimacy and effectiveness. To improve transparency I recommend the SEC to push for complete disclosure of supporting information, eliminating, extensive redactions, notably the 205 pages detailing margin threshold calculation methods. It is extremely important for the public to review and comment, particularly in light of the OCC's substantial role as a SIFMU. I encourage the SEC to take proactive steps to ensure transparency in the OCC's rule making processes. Such as, enforcing requirements for the OCC to actively seek and consider input from its members and participants, enhancing transparency and stakeholder engagement. I strongly recommend the implementation of clear, comprehensive and well-defined guidelines to govern the use of idiosyncratic control settings, particularly including the calculation of margin thresholds during periods of high volatility. Thank you for your consideration, Garth R. Baker, MPH