Mar. 4, 2024
Dear SEC, I trust this letter finds you well. I wish to express my reservations and concerns regarding the proposed rule change by the Options Clearing Corporation (OCC), specifically pertaining to the adjustment of parameters for calculating margin requirements during periods of heightened market volatility. First and foremost the details provided in the redacted materials lack the transparency necessary for a comprehensive assessment of the potential implications for these new rules. The absence of explicit information in the redacted materials hinders a thorough understanding of the proposed adjustments and their broader ramifications. Transparency is a cornerstone in fostering trust and confidence among market participants and regulators alike. Without a clear comprehension of the underlying rationale and factors driving these changes, it is therefore impossible to evaluate potential risks and make informed decisions. Furthermore, I would like to emphasize the perceived conflict of interest associated with the role of the Financial Risk Management (FRM) Officer overseeing these changes. Given the pivotal responsibility of the FRM Officer in risk management alone, it is imperative to ensure that the decision-making process remains impartial and objective. Addressing this concern will contribute to maintaining the credibility and integrity of risk management practices. And trust in the market. To finish, stressing the responsibility of Clearing Members to meet their margin obligations, even in times of market stress, is paramount. It is crucial to counteract the inclination to use procyclicality as an excuse to shirk financial responsibilities, emphasizing the need for a fair and transparent market. A call for stricter enforcement of obligations serves as a deterrent against risky behavior, ultimately contributing to the overall stability of the market. In advocating for a thorough reconsideration of the proposed rule change, I respectfully urge SEC to prioritize transparency, risk mitigation, and the overall well-being of the broader market. A comprehensive review, involving public consultations and an open dialogue with market participants, is essential to address concerns and potential ramifications adequately. I appreciate your attention to this matter and your commitment to maintain the stability and integrity of our financial markets. I am confident that a diligent reassessment of the proposed rule change will lead to a more robust regulatory framework that serves the best interests of all market participants. Thank you for your time and consideration. Sincerely, Benoît Varela