May 17, 2024
I am writing to express my serious concerns about SR-OCC-2024-001, a proposed rule change by the Options Clearing Corporation (OCC) that would adjust how margin requirements are calculated during volatile market periods. While I appreciate the opportunity to provide input, I strongly oppose the approval of this proposal. The proposal lacks transparency due to significant redactions, preventing meaningful public review. Additionally, it poses increased systemic risk by reducing margin requirements for Clearing Members, potentially leading to their inability to meet financial obligations and defaults. The Financial Risk Management Officer's role presents a conflict of interest as they are tasked with overseeing both Clearing Members' well-being and the OCC itself. Furthermore, the proposal creates a moral hazard by shifting the costs of Clearing Member defaults to the non-bank liquidity facility, perpetuating an unfair marketplace. It also fails to adequately manage liquidity risk, further increasing systemic risk, as evidenced by the OCC's reliance on reducing margin requirements. I agree with the SEC's reasons for rejecting this rule, including the failure to promote prompt and accurate clearance and settlement of securities transactions, lack of clear governance, and inadequate policies and procedures for managing credit exposures and margin calculations. In conclusion, I strongly support the SEC's rejection of this proposed rule change to protect investors and the integrity of our financial markets. Key points of concern: Lack of transparency in the proposal hinders public review. Increased systemic risk due to reduced margin requirements for Clearing Members. Conflict of interest in the Financial Risk Management Officer's role. Moral hazard created by shifting default costs to the non-bank liquidity facility. Inadequate risk management as evidenced by reliance on reducing margin requirements. Sincerely, Household investor.