Feb. 7, 2024
I have several concerns about the OCC rule proposal. I highly oppose this proposed rule change and do not support it's approval. I'm concerned about the lack of transparency in our financial system as evidenced by this rule proposal. The details of this proposal along with supporting information are significantly redacted, which prevents public review or at the very least makes it exceedingly difficult for the public to review. On that basis alone, the proposal should be rejected. Additionally, this rule proposal and these special margin reduction procedures exist because a single Clearing Member defaulting could result in a cascade of Clearing Member defaults, potentially exposing the OCC to financial risk. Thus, Clearing Members who fail to properly manage their portfolio risk against long tail events become de facto "Too Big To Fail". For this reason as well, this proposed rule change should be rejected and Clearing Members should face the consequences of failing to manage their portfolio risk, including against long tail events. The margin requirement reductions for Clearing Members at risk of failure impairs the protection from market risks associated with Clearing Member's positions provided by the margin collateral that would have been collected by the OCC. For this reason, this rule proposal should be rejected and the OCC should enforce sufficient margin requirements and minimize the size of any bailouts that may already be required. If this rule proposal is approved, mitigating the procyclical margin requirements directly reduces the first line of protection for the OCC, margin collateral from at risk Clearing Members, so this rule proposal should be rejected, made fully available for public review, and approved only with significant amendments to address the issues raised herein. Thank you, Jonathan W. Dykehouse