Mar. 2, 2024
I am writing to express my deep concerns regarding the proposed rule change by the Options Clearing Corporation (OCC) to adjust parameters for calculating margin requirements during periods of high market volatility. As a participant in the financial markets, I believe it is essential to voice apprehensions regarding potential impacts on market stability, transparency issues surrounding redacted materials, and the inherent conflicts of interest associated with the role of the Financial Risk Management (FRM) Officer. Firstly, the proposed adjustments to margin requirements during periods of high market volatility raise significant concerns about market stability. While adjustments may be deemed necessary to manage risk effectively, any changes to margin requirements must be implemented cautiously to avoid unintended consequences such as increased market volatility and systemic risk. The potential for abrupt changes in margin requirements could lead to market participants being caught off-guard, resulting in market disruptions and heightened volatility. Such instability could undermine investor confidence and have far-reaching implications for the broader financial system. Furthermore, the lack of transparency surrounding redacted materials is troubling. Transparent governance processes are essential for maintaining trust and confidence in the regulatory framework governing financial markets. Without access to complete information regarding the rationale behind proposed rule changes and the factors considered in the decision-making process, market participants are left in the dark and unable to fully assess the potential implications for their operations and risk exposure. Transparency fosters accountability and ensures that regulatory decisions are made in the best interests of all stakeholders. Additionally, the role of the Financial Risk Management (FRM) Officer introduces inherent conflicts of interest that warrant careful consideration. As a key decision-maker responsible for assessing risk and implementing risk management strategies, the FRM Officer must remain impartial and prioritize the broader market's well-being. However, the potential for conflicts of interest arises when individuals responsible for risk management also have vested interests in the financial outcomes of their decisions. Such conflicts undermine the integrity of risk management processes and may lead to decisions that prioritize short-term gains over long-term stability. In light of these concerns, I urge the SEC/Relevant Regulatory Body to thoroughly reconsider the proposed rule change by the OCC. It is imperative that regulatory decisions prioritize transparency, risk mitigation, and the broader market's well-being. I respectfully request that the SEC/Relevant Regulatory Body undertake a comprehensive review of the proposed rule change, soliciting feedback from a diverse range of market participants and experts to ensure that any adjustments to margin requirements are well-founded, transparent, and promote market stability. Thank you for considering my concerns. I trust that the SEC/Relevant Regulatory Body will give due diligence to this matter and take appropriate steps to safeguard the integrity and stability of our financial markets. Sincerely, Matteo Ragno