Subject: SR-NSCC-2021-016: WebForm Comments from Anonymous, retail investor
From: Anonymous, retail investor
Affiliation:

Apr. 21, 2022


This rule proposal should be withdrawn.



My concern about the proposal are exacerbated by the NSCCs failure to demonstrate that current margin requirements are insufficient to cover credit risks. On the contrary, I question NSCCs rationale that the Proposed Changes are needed to mitigate its risk as a central counterparty since the NSCC has claimed within the past year that increases in the Required Fund Deposit gave it a confidence level well in excess of 99%. A year ago, NSCC increased elements of its Require Fund Deposit significantly increasing margin charges for microcap and OTC securities, including the volatility charge, the margin differential charge, the coverage component and backtesting charge. NSCC is already protected against credit risk from member trading and market volatility, many times over via transactional margin charges and offers no explanation for why the margin charges, already imposed on trading are not more than sufficient to cover its central counterparty risk. Additionally, the NSCC has failed to explain why it would be appropriate to use the value-at-risk (VaR) model to determine the minimum excess net capital requirements for membership. The VaR model is already used to calculate and impose margin on trading activity. Using this model would double count this alleged risk: at the transactional level where NSCC already collects margin that commonly exceeds the value of the position to be cleared, and in the proposed increases in broker-dealer excess net capital.
 
end