April 7, 2021
Belated address to all parties concerned:
Excuse the late submission, but this letter is intended moreso as a response to the SEC's notice of no objection filed today regarding this advanced notice.
As an interested party, I have begun to better understand the rulemaking procedures of self-regulatory organizations, but understanding the intent and expected outcome of certain filings at times proves difficult when the filings are couched in the vernacular of securities legislation.
Reading the advance notice was not the issue I had difficulty with, however -- it was (and currently remains) the sole comment on OCC-801 that was made publicly available.
Susquehanna International Group's rebuttal to the filing from roughly one week prior posits that OCC-801 does not best serve the interests of the public nor the safety of investors, and I had difficulty understanding how this conclusion was reached.
Richard J. McDonald seems to state that a portion of the skin-in-the-game equity proposed would be comprised of unrebated clearing fee income, and that the capital dedicated towards preventing liquidity shortfalls would be paid for by investors through the gradual accumulation of clearing fees.
Furthermore, the implication appears to be that the inclusion of those fees as part of the proposed skin-in-the-game would incentivize OCC members to increase their charges for providing clearing services as a method of mitigating the risk of their actual skin-in-the-game in the form of their unvested EDCP.
Understandably, this is relevant to myself, and I would like to know if the SEC's notice of no objection carries the implication that the investor-side risk indicated by the SIG submission is an unwarranted or fallacious concern, or if said risks are acceptable in light of the benefits of OCC-801. It is difficult to draw my own conclusions, as there is no readily-accessible quantitative data (to the best of my knowledge) regarding current unrebated clearing fee practices, and how much, proportionally speaking, said fees would contribute to the minimum skin-in-the-game under the Proposal. If there are any resources available to assist me in understanding that I have overlooked, I would very much appreciate it.
Kindly yours, CJ Chou.