Feb. 21, 2024
Dear Securities and Exchange Commission, I'm reaching out to share my worries about the proposed rule change by the Options Clearing Corporation (OCC) regarding margin requirements during volatile market periods. As a long-time investor from Indiana, I value stability and fairness in our financial system, and I believe my perspective is important in this matter. The OCC's proposed rule change (SR-OCC-2024-001) raises concerns because it could unintentionally protect risky financial positions during market volatility. By allowing adjustments to margin requirements based on market conditions, it might prevent necessary risk management measures like margin calls. This could lead to unchecked growth of risky positions and larger losses, threatening the stability of our market in the long run. One issue that worries me is the role of the Financial Risk Management (FRM) Officer. This individual is tasked with safeguarding OCC's interests, which may not always align with what's best for the broader market. The lack of transparency in the redacted materials accompanying the proposal also raises questions about the thoroughness of the evaluation process and limits public discourse. While I understand the need to manage risks during volatile periods, it's crucial to ensure that risk management measures don't inadvertently shelter bad investments. Adjusting margin requirements is important for market stability, but it must be done in a way that benefits everyone. Considering the concerns raised in the OCC Rule proposal, particularly the potential impact on market stability and Clearing Member failures, I suggest revisiting the OCC's loss allocation framework. Clearing Fund deposits of non-defaulting firms should be prioritized over the OCC's pre-funded resources to promote fairness and transparency. To address these concerns, I propose additional safeguards and modifications to the rule, such as prioritizing transparency requirements, strengthening oversight mechanisms, and involving industry experts in the evaluation process. In conclusion, I believe it's essential to prioritize fairness, transparency, and the well-being of all market participants in any rule changes. I trust that the SEC will carefully consider these concerns and work towards a rule that upholds the integrity of our financial markets. Sincerely, Alizia