Mar. 4, 2024
Concerns and Opposition to OCC Rule Proposal SR-OCC-2024-001 (34-99393) Dear SEC Commissioners, I am writing to express my deep concerns regarding the Options Clearing Corporation's (OCC) proposed rule change, SR-OCC-2024-001, which addresses adjustments to margin requirements during periods of heightened market volatility. My primary concerns with the OCC rule proposal are as follows: 1. **Lack of Transparency:** The proposal contains significant redactions, hindering public understanding and meaningful comment. Without a transparent framework, it is challenging for the public to assess and contribute constructively to the rulemaking process. 2. **Unequal Treatment of Investors:** The proposed rule seems designed to favor Clearing Members by repeatedly reducing their margin requirements, potentially creating an unfair advantage in the market. This undermines the principle of fair play for all market participants, including retail investors like myself. 3. **Risk to Financial Stability:** The OCC's reasoning for the proposed rule change suggests concerns about systemic risk. However, the proposal appears to prioritize avoiding margin calls for Clearing Members over safeguarding the overall stability of the financial system. This creates a potential conflict of interest and raises questions about the adequacy of risk management practices. 4. **Potential Conflict of Interest:** The proposal highlights a conflict of interest concerning the Financial Risk Management (FRM) Officer, who may be compelled to prioritize protecting Clearing Members over the OCC's broader financial stability. This compromises the integrity of risk management and undermines the protection provided by collected margin collateral. 5. **Leveraging Position for Regulatory Approval:** There is a concern that the OCC, as a crucial element in the financial system, may be leveraging its position to influence regulatory decisions. This raises questions about the independence and impartiality of the decision-making process. In light of these concerns, I respectfully urge the SEC to thoroughly review and reconsider the approval of OCC Rule Proposal SR-OCC-2024-001. A fair, transparent, and equitable financial market is essential for the well-being of all investors and the stability of our financial system. Thank you for your attention to this matter. I trust that the SEC will carefully consider the implications of the proposed rule change and its potential impact on the integrity of our financial markets. Sincerely, John L. Schaeffer