Feb. 5, 2024
Dear SEC/Relevant Regulatory Body, I am writing to express my deep concerns regarding the proposed rule change by the Options Clearing Corporation (OCC) outlined in file number SR-OCC-2024-001. This proposal seeks to adjust parameters for calculating margin requirements during periods of high market volatility, and I believe it poses significant risks to market stability, transparency, and fairness. Introduction: The proposed rule change, as it stands, raises several critical issues that warrant thorough examination. The reduction in margin requirements during volatile market conditions, as proposed by the OCC, could potentially shield risky positions and exacerbate market instability rather than mitigate it. Evaluation of Risk Management Mechanism: Risk management mechanisms, such as margin calls, are essential for maintaining market stability and preventing systemic risks. However, the proposed rule change threatens to undermine these mechanisms by allowing for unchecked risk exposure during times of heightened volatility. Specific Recommendations: I strongly recommend a reassessment of the loss allocation framework to prioritize Clearing Fund deposits over the OCC's pre-funded resources. Additionally, the implementation of an independent review mechanism is imperative to ensure impartial evaluation of control settings and mitigate potential conflicts of interest. Additional Safeguards and Modifications: Enhanced transparency measures, including providing non-confidential summaries of redacted materials, are necessary to foster trust and accountability within the financial system. Strengthening oversight mechanisms and incorporating public input in decision-making processes are also essential steps towards promoting market stability and fairness. Industry-Wide Standards and Best Practices: Collaboration with stakeholders to establish industry-wide standards and best practices is paramount in ensuring the integrity and resilience of financial markets. Public accessibility to stress testing results would further demonstrate the effectiveness of risk management measures and bolster investor confidence. Conclusion: In conclusion, I urge the SEC/Relevant Regulatory Body to thoroughly reconsider the proposed rule change in light of the concerns raised. Transparency, risk mitigation, and the well-being of the broader market should be prioritized in any regulatory decision-making process. I am confident in the SEC/Relevant Regulatory Body's ability to uphold these principles and safeguard the integrity of our financial system. Thank you for your attention to this matter. Sincerely, Tyler Mosley