Mar. 2, 2024
Dear Commissioner, I hope this letter finds you well. As an active participant in the financial markets and a proponent of transparent and fair market practices, I am writing to express my strong objection to the proposed rule SR-OCC-2024-001. While recognizing the intended purpose of the rule to formalize OCC's process for making adjustments during periods of high volatility, the lack of transparency surrounding specific details, particularly the redaction of information related to the calculation of parameters and margin thresholds, is deeply concerning. Transparency is crucial for market participants to evaluate the fairness and efficacy of risk management measures. The proposed rule grants extensive authority to the OCC to adjust margin thresholds based on undisclosed parameters during critical events, posing a significant threat to margin call requirements. The reliance on idiosyncratic control settings, with over 200 instances within a span of less than four years, raises questions about the consistency and appropriateness of these measures, especially during times of heightened market volatility. Furthermore, concentrating significant decision-making authority in the hands of a single FRM Officer introduces risks of conflicts of interest and potential abuse of power. The discretionary power granted to the FRM Officer to adjust idiosyncratic control settings raises concerns about the fairness and integrity of the risk management framework. The lack of solicited comments for public input further exacerbates these concerns, as it undermines the principles of transparency and inclusivity in the rule-making process. Active engagement with stakeholders is essential to ensure that regulatory actions address potential concerns and reflect diverse perspectives. In light of these issues, I urge you to reconsider the proposed rule and take into account the following suggested improvements: 1. Strengthen and enforce margin requirements to align with the risks inherent in Clearing Member positions. 2. Introduce external auditing and supervision to enhance transparency and proactive risk management. 3. Incorporate public input through consultations and hearings to ensure inclusivity in the rule-making process. 4. Advocate for public accessibility of stress testing results to build trust among market participants. 5. Consider establishing an external oversight committee comprised of industry experts to ensure impartial evaluation of risk management practices. These measures are essential to safeguarding the stability and integrity of our financial markets. Thank you for your attention to this matter. Sincerely, Craig Glover.