May 7, 2024
I am writing to express my concern about the Options Clearing Corporation's (OCC) proposed rule change, SR-OCC-2024-001. I support the SEC's consideration of disapproval for several reasons. Lack of Transparency The details of this proposal, particularly Exhibits 5 and 3, are heavily redacted. This lack of transparency makes it impossible for the public to properly review and comment on the proposal. Without a full public review, this proposal should be rejected. Concerns about Margin Requirements The OCC's proposal appears designed to protect Clearing Members from potential losses by reducing margin requirements. This could increase risks for the OCC and the stability of the financial system. The proposal allows the OCC to reduce margin requirements for Clearing Members at risk of default. This could lead to a cascade of Clearing Member failures if one Clearing Member defaults. The OCC's financial safeguards, including margin collateral, would be reduced, making them less effective. OCC's Conflict of Interest The proposal creates a conflict of interest for the OCC's Financial Risk Management (FRM) Officer. The FRM Officer is supposed to protect the OCC's interests, but the proposal prioritizes protecting Clearing Members from default, even if it exposes the OCC to greater risk. Alternative Solutions Increase and enforce margin requirements to reflect the risks associated with Clearing Member positions. Implement external auditing and supervision to ensure risks are identified and managed before they become systemic. Change the order of loss allocation in the OCC's Loss Allocation waterfall to incentivize Clearing Members to take on appropriate risk management. Reduce "single points of failure" in the financial system by increasing competition among clearing agencies. Thank you for the opportunity to comment. I urge the SEC to disapprove SR-OCC-2024-001 to protect investors and ensure a fair, transparent, and resilient market. A concerned retail investor