Feb. 4, 2024
Redacted details hinder a comprehensive public review and valuable feedback. The proposal reads to designate Clearing Members, even those poorly managing risks, as de facto "Too Big To Fail," risking the stability of the financial system. The proposal's blame on U.S. regulators implies regulatory shortcomings, yet the actual problem extends to market participants exploiting positions, such as engaging in excessive naked shorting, surpassing regulatory concerns. The role of the Financial Risk Management (FRM) Officer presents a conflict, as they are tasked with safeguarding both OCC's interests and at-risk Clearing Members. This concentration of responsibility raises concerns, as relying on one person to manage conflicting interests may compromise impartial risk assessment and management. The proposal seeks to shield Clearing Members by reducing margin requirements, potentially heightening risks for both the OCC and the broader financial system. Over 200 instances of "idiosyncratic" control settings in less than four years raise concerns about their consistency and necessity. The proposal's impact on OCC's pre-funded financial resources is a source of worry, potentially exposing it to financial risks. Rules create an uneven playing field as Clearing Members consistently benefit from reduced margin requirements, putting other participants at a disadvantage. Reducing margin requirements for at-risk Clearing Members is considered illogical and contradicts the OCC's established risk management framework