May 17, 2024
Dear SEC, I am writing to share my concerns regarding SR-OCC-2024-001, titled “Proposed Rule Change by The Options Clearing Corporation Concerning Its Process for Adjusting Certain Parameters in Its Proprietary System for Calculating Margin Requirements During Periods When the Products It Clears and the Markets It Serves Experience High Volatility.” While I appreciate the opportunity to comment, I must oppose the approval of this proposal for several reasons: Insufficient Transparency: The proposal includes extensive redactions, hindering meaningful public evaluation and feedback. Increased Systemic Risk: The OCC's suggestion to lower margin requirements for Clearing Members heightens the risk to our financial system's stability. If Clearing Members cannot fulfill their financial obligations, they will be forced to liquidate their positions. Conflict of Interest: The Financial Risk Management Officer's role inherently conflicts with overseeing both Clearing Members' interests and the agency's well-being. Moral Hazard: By transferring the costs of Clearing Member defaults to the non-bank liquidity facility, the proposal creates a moral hazard and fosters an inequitable marketplace. Poor Risk Management: The proposal inadequately addresses liquidity risk and raises systemic risk, as demonstrated by the OCC's dependence on lowering margin requirements. I acknowledge and appreciate the SEC's prior rejection of this rule due to the following reasons: Failure to ensure prompt and accurate clearance and settlement of securities transactions and to safeguard securities and funds. Lack of clear and direct lines of responsibility in governance arrangements. Inadequate policies and procedures to manage credit exposures to participants and insufficient margin calculations to cover potential future exposure. In conclusion, I support the SEC's decision to reject this proposed rule change, prioritizing the protection of all investors and the integrity of our financial markets. Thank you for considering my concerns and for your ongoing efforts to safeguard our markets. Sincerely, Richard Corrigan Household Investor