May 4, 2024
Dear Vanessa A. Countryman, Secretary, I am writing to express my vehement opposition to the Proposed Rule Change under SR-OCC-2024-001, titled "Proposed Rule Change by The Options Clearing Corporation Concerning Its Process for Adjusting Certain Parameters in Its Proprietary System for Calculating Margin Requirements During Periods When the Products It Clears and the Markets It Serves Experience High Volatility." The repercussions of this proposal are deeply concerning and threaten to compromise the fairness, transparency, and stability of our financial markets. ?Lack of Transparency: The extensive redactions in Exhibit 5 and supporting information inhibit meaningful public review and comment, essential pillars of fair regulation and market integrity. ?Accountability: The attempt by the OCC to shift blame onto U.S. regulators for not implementing stricter controls displays a worrying lack of accountability and transparency within the regulatory framework. ?Systemic Risk: The proposal's focus on reducing margin requirements for Clearing Members disregards the systemic risk posed by potential failures, prioritizing short-term gains over long-term market stability. ?Conflict of Interest: The proposal codifies a conflict of interest for the Financial Risk Management Officer, undermining the fundamental purpose of risk management and regulatory oversight. ?Inadequate Protection: By failing to enforce margin requirements commensurate with risks, the proposal exposes the OCC and other market participants to heightened financial risk and shifts the burden of Clearing Member defaults onto non-bank liquidity facilities, creating moral hazards. ?Governance Clarity: The governance arrangements outlined in the proposal lack transparency and clear lines of responsibility, further eroding trust in the regulatory process. ?Exploitation of Position: The OCC's exploitation of its status as a single point of failure and attempts to coerce approval of the proposal set a dangerous precedent of self-serving actions at the expense of market integrity. ?Stronger Safeguards Needed: Rather than reducing margin requirements, the proposal should prioritize stronger safeguards, external auditing, and transparent governance to prevent systemic risks and protect investors. ?Immediate Action Required: Prompt suspension and liquidation of Clearing Members when projected losses exceed certain thresholds are imperative to prevent escalating problems and maintain market stability. ?Reducing Systemic Risks: Promoting redundancy and resiliency in financial markets is crucial to minimizing systemic failures and avoiding bailouts that undermine market integrity. In conclusion, I urge you to reject the Proposed Rule Change under SR-OCC-2024-001. Upholding fair markets, protecting investors, and ensuring the stability of our financial system require immediate action and comprehensive measures to address these critical issues. Thank you for considering my concerns. Sincerely, Michael S. Montgomery 109 9th Streeet Apalachicola, FL. 32320