Jan. 31, 2024
Dear SEC, Thank you for the opportunity to present my comment on the proposed rule change SR-OCC-2021-001 34-99393. I'm reaching out to share my concerns regarding OCC’s proposed rule change on calculating margin requirements during market volatility. From what I can see of the current proposal it looks like it will allow risky investments off the hook during turbulent times. The Financial Risk Management Officer's dual role raises a red flag due to potential conflicts of interest. The redacted materials make it hard for us to understand the full picture. To address these concerns: Market Stability: The proposal could shield risky investments during volatile times, impacting market stability. It's essential to ensure risk management measures don't unintentionally encourage imprudent risks. Conflict of Interest: The Financial Risk Management Officer's role needs careful consideration to avoid conflicts of interest that might not align with the broader market's well-being. Lack of Transparency: Redacted materials limit our ability to assess the proposal fully. Transparency is key for informed decision-making and public trust. To make the proposal better: Reconsider Loss Allocation Framework: Prioritize Clearing Fund deposits of non-defaulting firms over OCC's pre-funded resources to enhance fairness and transparency. Independent Review Mechanism: Consider an external review mechanism to assess control settings' impact on OCC's and the market's interests, ensuring unbiased evaluations. Enhance Transparency: Provide non-confidential summaries of redacted materials and prioritize transparency in reporting and decision-making processes. Strengthen Oversight: Advocate for increased oversight from regulatory bodies, public input through consultations, and industry-wide standards for better risk management. I believe these changes will improve the rule change for the better, promoting fairness, transparency, and market integrity for those of us that you are tasked to protect. Thank you for your attention to these concerns. Regards, Jim Ferguson