May 14, 2024
S A Concerned Individual Retail Investor Oakland, CA, USA sanchny@gmail.com 2024-05-14 Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Dear SEC, As a retail investor, I appreciate the SEC's decision to reject the OCC's proposed rule change SR-OCC-2024-001. I support this disapproval due to significant concerns about the proposal's transparency, risk management, and conflict of interest, which are critical for protecting investors and maintaining market stability. The lack of transparency in the OCC's proposal is alarming. The redactions in the details prevent meaningful public review and comment, undermining the principle of an open and fair market. Transparency is essential for investor confidence and regulatory accountability. The proposed adjustments to margin requirements during periods of high market volatility pose systemic risks. Reducing margin requirements in volatile conditions can lead to liquidity issues for clearing members, potentially causing a cascade of defaults. This increases the risk to the OCC and the broader financial system. Margin requirements should be strictly enforced to mitigate such risks, not reduced. The role of the Financial Risk Management (FRM) Officer in the proposal presents a clear conflict of interest. The FRM Officer's position, as outlined, seems more aligned with protecting clearing members than the OCC itself. This compromises the integrity of risk management practices and fails to ensure the safety of the clearing agency. Moreover, the proposal appears to protect clearing members from the consequences of risky trades by allowing frequent reductions in margin requirements. This not only creates an unfair advantage for clearing members but also exposes the OCC and the financial system to greater risks. Clearing members must be held accountable for managing their risks appropriately, including during periods of high volatility. The OCC's designation as a Systemically Important Financial Market Utility (SIFMU) underscores the need for rigorous risk management and transparency. Allowing frequent margin reductions undermines this responsibility and could destabilize the financial system. In conclusion, the SEC's decision to reject the OCC's proposed rule change is prudent and necessary. By prioritizing transparency, stringent risk management, and the elimination of conflicts of interest, the SEC is upholding its commitment to a fair and stable financial market. Thank you for your attention to this matter and for your dedication to protecting investors and maintaining market integrity. Sincerely, S A Concerned Individual Retail Investor Oakland, CA, USA