Feb. 28, 2024
Dear Members of the Securities and Exchange Commission, I am writing to express my concerns regarding Rule SR-OCC-2024-001, which proposes adjustments to margin thresholds, specifically during periods of high volatility. I believe that certain aspects of this rule raise critical questions and introduce risks that will harm retail and household investors. Firstly, the proposal grants unchecked authority to the Financial Risk Management (FRM) Officer to make unilateral decisions during periods of high market stress. While ostensibly intended to protect the interests of the OCC, this authority raises questions about potential conflicts of interest. The FRM Officer is entrusted with safeguarding both the OCC's interests and those of at-risk Clearing Members, creating a potential conflict that needs addressing and changing. Why do the interests of the OCC override a fair market? The market should be fair for all participants, and that includes participant’s who gamble within said market and trade on margin. If participants are prepared to reap the benefits of a good trade, they should also be prepared to pay the bill that is due on a bad trade. There should be no reason to hold them in any other regard or offer protection. That does not resemble a fair market! I don’t see the OCC stepping in to block a margin call on a retail or household investor, for example. Secondly, the use of "idiosyncratic volatility control settings" to adjust margin thresholds during high volatility introduces a risk because it lacks transparency in the calculation and implementation process. Without clear guidelines on how these settings are determined, there is a potential for arbitrary or ad-hoc adjustments, allowing the Options Clearing Corporation (OCC) to alter the criteria whenever Clearing Members require assistance. This flexibility raises concerns about fairness, potentially favoring certain market participants or introducing an element of unpredictability. Moreover, the proposal's supporting evidence, particularly regarding the calculation of margin thresholds, is troublingly redacted. This lack of disclosure undermines the principles of transparency and accountability that are crucial in regulatory frameworks. As stakeholders, including retail investors, we require detailed information on how these adjustments will be made to ensure fair and equitable treatment of all market participants. In light of these concerns, I urge the Securities and Exchange Commission to thoroughly review and reconsider the implications of Rule SR-OCC-2024-001. Clear guidelines, transparency in calculations, and checks and balances on discretionary authority are essential for maintaining the integrity and stability of the financial markets, which ultimately protect retail investors and market participants. I trust that the SEC will carefully consider these concerns and take appropriate actions to address the potential risks associated with this rule. The world is watching and the favoritism you are showing towards bad actors is on full display. Best Regards, JMB Sent from Proton Mail for iOS