After a thorough review and consideration of the proposed rule change SR-OCC-2023-007, as amended by Amendment No. 2, concerning modifications to the Amended and Restated Stock Options and Futures Settlement Agreement between The Options Clearing Corporation (OCC) and the National Securities Clearing Corporation (NSCC), we have decided to reject the proposal based on significant concerns regarding its potential impact on market risk management and broker accountability. Primary Concerns: Diminished Broker Responsibility: The proposal introduces a mechanism where the OCC can make a Guaranty Substitution Payment (GSP) to NSCC to facilitate the settlement of transactions in the event of a common clearing participant's default. This approach, while aiming to streamline settlement processes, inadvertently might allow brokers to engage in higher-risk trading activities without maintaining adequate margins or risk controls. My assessment concludes that such a mechanism could reduce brokers' incentives to rigorously manage their risk exposure and maintain appropriate liquidity buffers. Risk Management Dilution: By providing a financial 'backstop' through the GSP, the proposal potentially dilutes the effectiveness of existing risk management frameworks. Effective risk management in securities trading requires all participants, especially brokers, to have 'skin in the game'—a direct financial stake in ensuring prudent trading and risk management practices. The proposed changes might weaken this principle by shifting the financial burden of a default more heavily onto the clearinghouses and, indirectly, their non-defaulting members. Market Integrity Concerns: A fundamental aspect of maintaining market integrity is ensuring that all participants adhere to strict risk management and margin requirements. The proposed rule change could set a precedent that undermines this principle by appearing to mitigate the consequences of default for brokers. This could lead to moral hazard, where brokers might perceive the costs of risky trading behaviors as being externalized to clearing agencies, thus engaging in even riskier activities without appropriate caution. Systemic Risk Implications: While the proposal aims to address liquidity and settlement risks in the event of a broker default, it does not sufficiently tackle the root causes of such defaults—namely, inadequate risk controls and excessive leverage. By focusing on post-default settlement mechanisms, the proposal may inadvertently contribute to systemic risk by enabling a regulatory environment that is perceived as overly accommodating of high-risk practices without corresponding safeguards. Conclusion: Given these concerns, particularly the potential for the proposed rule change to encourage brokers to engage in risky activities without adequate margin or risk management controls, I cannot support the implementation of SR-OCC-2023-007 Amendment No. 2 as currently outlined. I strongly advocate for a comprehensive review of the proposal, with a focus on enhancing broker accountability, reinforcing risk management practices, and safeguarding market integrity. Any future proposals should prioritize mechanisms that ensure all market participants, especially brokers, bear appropriate responsibility for their risk exposures, thereby contributing to a more stable and resilient financial system.