May 16, 2024
Dear SEC Commissioners, I am writing to express my firm support for the SEC’s recent decision to reject the Options Clearing Corporation (OCC) proposed rule change SR-OCC-2024-001. This decision underscores the SEC's commitment to maintaining a fair and transparent financial market, which is fundamental for investor protection and systemic risk mitigation. The proposed rule sought authority for the OCC to adjust margin thresholds during periods of significant market volatility using undisclosed criteria. This lack of transparency in defining and altering margin requirements is concerning, as it deprives investors and market participants of the ability to understand and prepare for potential impacts on their investments. Transparency is essential in fostering trust and stability in the financial markets, and any departure from this principle could lead to increased systemic risks and market manipulation. Additionally, the role of the Financial Risk Management (FRM) Officer, as outlined in the proposal, presents a clear conflict of interest. The FRM Officer's dual responsibility to both protect the OCC's interests and assist at-risk clearing members during turbulent times could compromise the objective enforcement of risk controls, further endangering the market’s integrity. Moreover, the ability to arbitrarily adjust margin requirements can precipitate undue market pressure in times of high volatility, potentially leading to forced liquidations and exacerbating market downturns. Such systemic risks are unacceptable, particularly when the underlying mechanisms remain non-transparent and are subject to unilateral adjustments by a single entity or individual. The SEC's rejection of the OCC's proposal is a commendable step towards safeguarding the principles of equity and rigor in market operations. It is crucial that any future regulatory changes proposed by clearinghouses like the OCC are developed with a greater emphasis on transparency, risk mitigation, and impartiality to ensure they align with the broader goals of market integrity and investor protection. Thank you for your attention to this matter and for your continued dedication to upholding the highest regulatory standards that protect our financial markets. Sincerely, Andrew Kish