May 17, 2024
I am writing to express my strong support for the Securities and Exchange Commission's (SEC) decision to reject the Options Clearing Corporation's (OCC) proposed rule change. This decision underscores the SEC's commitment to maintaining a fair, transparent, and stable financial market. I believe that the SEC's action is crucial for upholding investor protection, ensuring robust risk mitigation, and promoting market integrity. First and foremost, the lack of transparency in the OCC's proposal raises significant concerns. Transparency is a cornerstone of a fair financial market, enabling investors to make informed decisions and fostering trust in the system. The OCC's proposal, however, fell short in providing clear and comprehensive details about its margin requirement adjustments. This opacity could obscure critical information from market participants, undermining confidence and potentially leading to uninformed or misguided investment decisions. Moreover, the proposal's approach to margin requirement adjustments during periods of market volatility could introduce substantial systemic risks. During volatile market conditions, precise and predictable margin requirements are essential to maintaining stability and preventing cascading failures. The OCC's proposed changes, lacking clear guidelines and safeguards, might exacerbate market volatility rather than mitigate it. This could lead to a heightened risk of defaults and systemic breakdowns, threatening the broader financial system. Another pivotal concern is the inherent conflict of interest in the role of the Financial Risk Management (FRM) Officer as outlined in the proposal. The FRM Officer's dual responsibility to both manage risk and potentially benefit from certain market outcomes presents a clear conflict that could compromise the integrity of risk management practices. Effective risk management must be unbiased and focused solely on safeguarding the financial system, free from any conflicting incentives. The proposal's failure to adequately address this conflict undermines the OCC's credibility and effectiveness in managing market risks. The SEC's decision to reject this proposal is a prudent measure to protect investors and uphold the principles of transparency and risk mitigation. By demanding higher standards of clarity and impartiality, the SEC ensures that all market participants operate on a level playing field, thereby promoting fairness and stability. In conclusion, I commend the SEC for its vigilant oversight and decisive action in this matter. The rejection of the OCC's proposed rule change aligns with the SEC's mission to protect investors, maintain fair and efficient markets, and facilitate capital formation. I urge the SEC to continue its rigorous review processes and uphold these vital principles in all future considerations. Thank you for your attention to this critical issue. I appreciate the SEC's ongoing efforts to safeguard the integrity of our financial markets. Sincerely, Ryan Retail Investor