May 9, 2024
Dear SEC, I oppose the OCC's rule change proposal for adjusting margin requirements during high volatility. The proposal lacks transparency due to redacted information, hindering public review. Reducing margin requirements for risky Clearing Members creates unfairness and systemic risk. The current system incentivizes "Too Big To Fail" behavior and socialization of losses. I propose the following alternative solutions to address these concerns: Increase and enforce margin requirements based on risk Implement external auditing and enhanced public reporting Suspend and liquidate failing Clearing Members Increase competition and redundancy in the clearing agency market Reasons for Opposition: The proposal weakens safeguards against market risks by reducing margin requirements for Clearing Members facing potential default It creates an uneven playing field for retail investors who face full consequences of long-tail risks The "idiosyncratic" and "global" control settings used to reduce margin lack clarity and transparency The Financial Risk Management (FRM) Officer role seems biased towards protecting Clearing Members over the OCC The proposal contradicts the OCC's own arguments about potential financial risks from Clearing Member defaults I urge the SEC to reject the proposed rule change and consider alternative solutions for a fair, transparent, and resilient market. Sincerely, Seth Heitzmann