Feb. 5, 2024
To whom it may concern, I am writing to express my concerns about the recent proposal by the Options Clearing Corporation (OCC) to modify the parameters used in calculating margin requirements during periods of high market volatility. As a professional deeply invested in the integrity and stability of our financial markets, I find it imperative to voice the potential risks and conflicts this proposed rule change might introduce. Impact on Market Stability: The proposed change in margin requirements could significantly impact market liquidity, especially during volatile periods. By adjusting margin requirements, the OCC risks amplifying market volatility rather than mitigating it. This could lead to more pronounced market swings, affecting not just sophisticated investors, but also smaller participants who are less equipped to manage such volatility. Lack of Transparency in Redacted Materials: Transparency is a cornerstone of fair and efficient markets. The redacted materials related to the proposed changes hinder a comprehensive understanding of its implications. This lack of transparency makes it challenging for stakeholders to fully grasp the potential impacts and raises concerns about the basis and rationale behind these changes. Conflict of Interest in the FRM Officer's Role: The role of the Financial Risk Management (FRM) Officer within the OCC should be impartial and solely focused on risk mitigation. However, the current structure, wherein the FRM Officer is directly affiliated with the OCC, presents an inherent conflict of interest. This could lead to decisions that are more in line with the OCC's interests rather than the broader market's well-being. In light of these concerns, I strongly advocate for a thorough reconsideration of the proposed rule change. It is crucial that any modifications to such critical parameters be transparent, evidence-based, and devoid of conflicts of interest. Our primary objective should always be to ensure the stability and integrity of the financial markets, and this can only be achieved through careful, balanced, and transparent rule-making. I urge the SEC to consider these points seriously and to engage with a diverse range of market participants to gather a broad perspective before implementing such significant changes. Thank you for your attention to this matter. I trust that the SEC will act in the best interest of maintaining a stable, transparent, and fair financial market. Respectfully, James Heffer