Feb. 28, 2024
Dear Commissioners, I am writing to express my strong opposition to Rule SR-OCC-2024-001, which appears to propose waiving margin requirements for the Options Clearing Corporation (OCC). I believe that such a waiver poses significant risks to the stability and integrity of our financial markets, particularly in the context of recent market volatility and the increasing participation of retail investors. It is evident that the OCC requires more robust oversight and regulatory scrutiny, rather than relaxation of margin requirements. Therefore, I urge the Securities and Exchange Commission (SEC) to reject this proposal and instead focus on implementing measures to enhance oversight, strengthen margin requirements, and safeguard the interests of retail investors. Firstly, it is imperative to strengthen margin requirements for the OCC to ensure that it maintains an adequate level of financial resources to withstand market stresses and fulfill its obligations. Margin requirements serve as a crucial risk management tool, and any relaxation of such requirements could expose the OCC to heightened financial risks, potentially leading to systemic consequences. Furthermore, existing margin requirements must be strictly enforced to prevent excessive risk-taking and ensure the stability of the derivatives market. Any deviation from these requirements undermines market integrity and erodes investor confidence. Therefore, the SEC should prioritize rigorous enforcement of margin regulations to maintain market discipline and mitigate systemic risks. In addition to strengthening margin requirements, it is essential to enhance oversight of the OCC by bringing in external auditors to conduct thorough examinations of its procedures and risk management practices. External audits provide an independent assessment of the OCC's operations and help identify potential weaknesses or deficiencies that require remediation. By subjecting the OCC to external scrutiny, regulators can enhance transparency and accountability, thereby bolstering market confidence. Moreover, enhancing transparency guidelines for the OCC is essential to ensure that investors have access to accurate and timely information about its operations and risk exposures. Transparent reporting enables investors to make informed decisions and assess the risks associated with their investments. Therefore, the SEC should mandate enhanced disclosure requirements for the OCC, including regular reporting of key risk metrics and financial performance indicators. In conclusion, I strongly urge the SEC to reject Rule SR-OCC-2024-001 and instead focus on implementing measures to strengthen oversight, enhance margin requirements, and promote transparency at the OCC. These reforms are necessary to safeguard the stability and integrity of our financial markets and better protect retail investors from undue risks. Thank you for considering my comments on this important matter. Sincerely, James DeWitt