May 14, 2024
Dear SEC, I am writing to express my strong support for the recent decision by the Securities and Exchange Commission (SEC) to reject the proposed rule change by the Options Clearing Corporation (OCC). This decision reflects the SEC's commitment to transparency, risk mitigation, and investor protection, all of which are crucial for maintaining a fair and stable financial market. One of the key concerns with the OCC's proposed rule change was the lack of transparency. Transparency is essential for market participants to make informed decisions and for regulators to effectively monitor and address risks. The lack of transparency in the OCC's proposal raised serious questions about its potential impact on market stability and investor confidence. Another major concern was the potential systemic risks from margin requirement adjustments during market volatility. Margin requirements play a critical role in risk management, and any changes to these requirements should be carefully considered to avoid unintended consequences. The OCC's proposal failed to adequately address these risks, which could have had far-reaching implications for the entire financial system. Additionally, there were concerns about the conflict of interest in the role of the Financial Risk Management (FRM) Officer. The FRM Officer is responsible for overseeing risk management practices, including margin requirements, which are central to the OCC's operations. Allowing the FRM Officer to also serve as a member of the OCC's Board of Directors creates a potential conflict of interest, as it may compromise the independence and objectivity of risk management decisions. The SEC's decision to reject the OCC's proposed rule change was a prudent one, based on the need to uphold transparency, mitigate risks, and protect investors. I applaud the SEC for its commitment to these principles and urge the OCC to address the concerns raised before submitting any future proposals. Sincerely, J. Freeland