May 15, 2024
Dear SEC Team, As a retail investor, I appreciate the additional consideration and opportunity extended by SR-OCC-2024-001 Release No 34-100009 [1] to comment on SR-OCC-2024-001 34-99393 entitled “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”. I support the SEC's grounds for disapproval due to concerns about transparency and fairness in the financial system. The lack of transparency in the OCC's proposal is alarming. The redacted details in Exhibit 5 and Exhibit 3 prevent meaningful public review. This proposal should be rejected based on insufficient public scrutiny alone. The OCC's proposed rule appears to prioritize protecting Clearing Members from risky trades by reducing margin requirements, increasing systemic risks. The OCC's own statements reveal that reducing margin requirements during high volatility could threaten financial stability. The rule proposal also highlights a conflict of interest for the Financial Risk Management (FRM) Officer, who is tasked with reducing margin requirements to protect at-risk Clearing Members, thereby undermining the OCC's financial safeguards. The proposal, combined with the recent rules SR-OCC-2022-802 and SR-OCC-2022-803, could allow the OCC to shift risks to non-bank liquidity facility participants, including pension funds and insurance companies, creating a moral hazard. To address these issues, I recommend: Enforcing increased margin requirements commensurate with risks. Implementing external auditing and supervision with enhanced public reporting. Reordering the Loss Allocation waterfall to prioritize non-defaulting firm deposits before the OCC’s own resources. Suspending and liquidating Clearing Members as soon as their losses exceed their margin deposits. Reducing single points of failure in the financial system to eliminate the Too Big To Fail risk. Thank you for considering my comments to ensure a fair, transparent, and resilient market for all investors. Best regards, Farris Nawas