Feb. 26, 2024
Dear Members of the Securities and Exchange Commission, I am expressing my concerns about Rule SR-OCC-2024-001, which proposes adjustments to margin thresholds during times of high volatility. Certain aspects of this rule raise important questions and introduce risks. The use of "idiosyncratic volatility control settings" to adjust margin thresholds during high volatility is risky because it lacks transparency in the calculation and implementation process. Without clear guidelines on how these settings are determined, there is a possibility for arbitrary adjustments, allowing the Options Clearing Corporation (OCC) to change the criteria as needed. This flexibility raises fairness concerns as it may lead to rules being changed based on individual circumstances, potentially benefiting certain market participants or creating unpredictability. This lack of transparency undermines the integrity of financial markets by eroding trust among participants. Financial markets rely on clear and consistent rules that are uniformly applied to ensure fairness. When rules can be adjusted opaquely, it creates uncertainty and reduces confidence in the regulatory framework, which is crucial for the effective functioning of financial markets. The lack of disclosure regarding the calculation of margin thresholds in the proposal is concerning. Stakeholders need detailed information on how these adjustments will be made to ensure fair treatment of all market participants. Additionally, giving unchecked authority to the Financial Risk Management (FRM) Officer to make decisions during high market stress raises questions about potential conflicts of interest. The FRM Officer is responsible for protecting both the OCC's interests and those of at-risk Clearing Members, creating a conflict that needs to be addressed and changed. I urge the Securities and Exchange Commission to thoroughly review and reassess the implications of Rule SR-OCC-2024-001. Clear guidelines, transparency in calculations, and checks on discretionary authority are vital for maintaining financial market integrity and stability. Thank you for considering these concerns, and I trust that the SEC will take appropriate actions to address the potential risks associated with this rule. Sincerely, Alexander Cooper Director, Superstonk Pty Ltd