Jan. 22, 2024
Dear SEC, I am writing to express my concerns and provide comments on the SEC proposal SR-OCC-2024-001. After careful review, it appears that this rule may inadvertently serve to protect bad bets by restricting margin calls. Allowing such bad bets to grow unchecked poses potential risks and may exacerbate issues when the standard risk mitigation measures prove insufficient. One notable concern is the apparent conflict of interest within the FRM Officer's role. The inherent bias towards protecting OCC and its interests over the broader market risk posed by these bad bets raises questions about the objectivity of decision-making. It is crucial to ensure that regulatory measures prioritize the stability and health of the overall market rather than favoring specific entities. Furthermore, the proposal's own acknowledgment of a risk factor with a 2-day expected shortfall short coverage under 99% raises red flags. The potential impact of idiosyncratic control settings on risk assessment is concerning, especially when it may result in exceeding the 99% threshold under regular control settings. This discrepancy underscores the need for a thorough evaluation of the proposed rule to address such vulnerabilities. A significant impediment to a comprehensive evaluation is the redaction of pertinent materials. Without access to complete and transparent information, it becomes challenging for stakeholders to make informed judgments about the effectiveness of the proposed rule. I strongly urge the SEC to provide unredacted materials for public scrutiny, enabling a more thorough and accurate assessment of the proposal's implications. In conclusion, I appreciate the SEC's efforts to enhance regulatory frameworks, but it is imperative to address the aforementioned concerns to ensure the proposed rule effectively safeguards the financial system. I urge the SEC to consider these comments in the ongoing deliberations on SR-OCC-2024-001. Sincerely, Kristoffer Svendsen