Feb. 13, 2024
I thank you for this opportunity to comment on SR-OCC-2024-001 34-99393?, as always, and with particular emphasis in this matter as the opportunity is conspicuous absent from the OCC. Why is it that the OCC, a public Systemically Important Financial Market Utility, would not allow comments for such a change? One can only speculate why such a consequential change would be quietly pushed through. The intent appears to be to avoid public criticism, and the OCC should have more integrity than to allow such exploitation. The issues with the proposed rule are numerous. First and foremost is the fact that the majority of supporting information has been redacted, making it impossible to completely assess the consequences of the proposed changes. It even goes so far as to say "Written comments were not and are not intended to be solicited wiith respect to the proposed change." How is this acceptable for a public organization? Even the small fraction of information we can review is disastrous in its consequences. The rule change proposes to improve the market stability and functioning, meanwhile every change it makes would increase pro-cyclicality of market instability and increase negative outcomes during idiosyncratic events. The rule proposes to lower margin requirements during challenging market conditions. This is no way to improve market stability as it will lead to further contagion, as non-defaulting members are further stressed and thus more likely to default themselves. Moreover, the change seeks to allow the OCC more discretion with its idiosyncratic risk controls. Instead of allowing the OCC more flexbility to affect markets through discretionary changes, we should be asking why it is necessary for the OCC to utilize idiosyncratic control settings so much in the first place. The OCC has made over 200 discretionary changes since December 2019. Each one of these necessarily has impacts on the markets, and is by design, unfair. This proposed rule aims to further centralize the power for the Financial Risk Management Officer to affect outcomes of extraordinary market conditions, to the benefit of those with the most influence over the FRM Officer. This is unfair and contrary to the principles of an efficient market. This creates a conflict of interest and the FRM Officer would effectively become a rubber stamp to alleviate the risk created by Clearing Members. More discretionary power would lead to more uncertainty. All these changes circumvent the true solution: Better generalized risk management. We need clear and predefined risk management rules. We need clear predefined rules for idiosyncratic control settings. We need clear and predefined oversight rules so that Clearing Members cannot exploit these rules and cause more risk the the entire system. The OCC's attempt at avoiding review and criticism are because these rules are fundamentally opposed to the interests of the public it serves, and both the OCC's behavior as well as the proposed changes are unacceptable, and should NOT be approved.