May 17, 2024
Subject: Concerns Regarding SR-OCC-2024-001 Dear Sir/Madam, I am reaching out to articulate my reservations about the proposed rule change by The Options Clearing Corporation, referenced as SR-OCC-2024-001. This proposal discusses adjustments to certain parameters in the proprietary system that calculates margin requirements in highly volatile market conditions. While I value the chance to engage on this issue, I must oppose the endorsement of this rule change for various reasons: Transparency Issues: Significant portions of the proposal are redacted, hindering the public’s ability to thoroughly review and provide feedback. Increased Systemic Risk: The proposal’s suggestion to lower margin requirements for Clearing Members could amplify risks to our financial stability. This is critical as it requires clearing members to settle their positions without delay in the event they fail to meet financial requirements. Conflict of Interest: There appears to be a conflict in the role of the Financial Risk Management Officer who is tasked with protecting both the clearing members and the regulatory body itself. Moral Hazard: By transferring the financial burden of defaults by Clearing Members to a non-bank liquidity facility, the proposal creates a moral hazard and fosters an unjust market environment. Inadequate Risk Controls: The proposal does not sufficiently address liquidity risks and might increase systemic threats, especially given its reliance on diminished margin prerequisites. Echoing the SEC’s grounds for disapproval, the proposal does not: - Ensure efficient and accurate clearance and settlement of securities transactions. - Maintain the security of securities and funds. - Define clear governance responsibilities. - Establish robust procedures for managing credit exposures to participants and calculating adequate margins for potential exposures. In conclusion, I align with the SEC’s decision to reject this rule change to safeguard all investors and maintain the integrity of the financial markets. Thank you for considering my viewpoints. Best regards, [Your Name] Household Investor