Feb. 18, 2024
Subject: Comments SR-OCC-2024-001 34-99393 From: Higinio Jr. Sustaita Affiliation: I don't believe the Options Clearing Corporation ( OCC ) proposed rule SR-OCC-2024-001 34-99393, is consistent with Section 17A of the Exchange Act. In addition, Parameters in STANS response to broad market volatility are in line with idiosyncratic price moves. Also, the GARCH does not overreact to changes in volatility. In doing so, they must buy back the shares or put up more collateral. Moving on, The Options Clearing Corporation (OCC) has proposed changes in its proprietary system for calculating margin requirements during periods of high volatility in the markets it serves. The proposed changes aim to mitigate risks during volatile market conditions. On the other hand, Implementing T+0 or T+1 settlement brings significant benefits to margin requirements in the United States stock markets. Through the real-time settlement mechanism, T+0 or T+1 settlement directly impacts margin requirements by enhancing transparency, reducing risk, and improving capital to enable participants to better manage their margin accounts and optimize their trading strategies while ensuring compliance with regulation story obligations. However, transaction settlements and minimizing counterparty risk, T+0 or T+1 settlement support the stability and integrity of margin trading in the US stock markets, ultimately contributing to a more secure and resilient financial system. Nevertheless, here are 10 bullet points outlining the reasons for keeping margin requirements in place under certain high volatility parameters. Bullet Points: 1. Risk Management: Margin requirements are essential for managing risk and ensuring that market participants have sufficient collateral to cover their positions during periods of high volatility. 2. Systemic Stability: Margin requirements help to maintain systemic stability by reducing the potential for market disruptions and ensuring that market participants are well-capitalized to weather turbulent market conditions. 3. Investor Protection: Keeping margin requirements in place during high volatility parameters is vital for protecting investors from excessive leverage and potential financial losses that may arise from unchecked market volatility. 4. Market Integrity: Margin requirements contribute to preserving the integrity of the market by promoting responsible trading practices and preventing excessive speculation during periods of heightened market turbulence. 5. Regulatory Compliance: Upholding margin requirements aligns with regulatory standards and ensures that market participants adhere to established risk management protocols and capital adequacy standards. 6. Mitigating Excessive Risk: By maintaining margin requirements, the OCC can help mitigate the build-up of excessive risk in the financial system during times of heightened market volatility. 7. Liquidity Preservation: Margin requirements play a crucial role in preserving market liquidity by ensuring that market participants have the necessary resources to meet their obligations, thus preventing potential liquidity crises. 8. Prudent Risk-taking: Margin requirements encourage market participants to engage in prudent risk-taking and discourage excessive leverage, thereby promoting overall market stability and resilience. 9. Preventing Margin Calls: By enforcing margin requirements, the OCC can reduce the likelihood of widespread margin calls that could exacerbate market stress and lead to forced liquidations, further intensifying volatility. 10. Safeguarding Clearing System: Margin requirements are vital for safeguarding the stability of the clearing system, ensuring that the OCC has adequate resources to cover potential losses and maintain the efficient functioning of the markets it serves. In conclusion, retaining margin requirements within certain volatility parameters in the OCC's proprietary system for calculating margin requirements is essential for promoting risk management, systemic stability, investor protection, market integrity, regulatory compliance, risk mitigation, liquidity preservation, prudent risk-taking, prevention of margin calls, and the safeguarding of the clearing system. Thank you for the opportunity to comment and deny proposal, No. 34-99393; File No. SR-OCC-2024-001 Fair, Markets Higinio Jr. Sustaita