Jan. 30, 2024
Dear SEC, I appreciate the opportunity to comment on SR-OCC-2024-001 (34-99393) regarding the proposed rule change by The Options Clearing Corporation. As a retail investor, I have several concerns about the rule proposal and do not support its approval. Transparency Concerns: The extensive redactions in Exhibit 5 and supporting information in Exhibit 3 limit public review, hindering meaningful comments. Full transparency is crucial for public trust. Procyclicality Controls: The OCC blames U.S. regulators for not adopting procyclicality controls, but the lack of transparency raises questions about the OCC's commitment to safeguard. Systemic Risk: The rule seems designed to protect Clearing Members from realizing the risk of potentially costly trades, which increases risks to the OCC and, consequently, the entire financial system. Margin Requirements: Clearing Members should face strictly defined margin requirements to avoid creating an unfair marketplace for other participants. Conflict of Interest: The proposed rule codifies a conflict of interest for the Financial Risk Management Officer, compromising the protection from market risks associated with Clearing Member positions. Recommendations: Increase and enforce margin requirements: Encourage Clearing Members to account for stressed market conditions. External auditing and supervision: Implement a fourth line of defense similar to the financial institutions' model. Modify loss allocation: Swap OCC's own pre-funded financial resources with Clearing fund deposits of non-defaulting firms in the Loss Allocation waterfall. Thank you for considering these concerns and recommendations. A fair, transparent, and resilient market benefits all investors. Sincerely, A Concerned Retail Investor