Jan. 29, 2024
Comment on SR-OCC-2024-001 34-99393 As a retail investor, I appreciate the opportunity to comment on SR-OCC-2024-001 34-99393 regarding the proposed rule change by The Options Clearing Corporation. However, I have several concerns about the proposal and do not support its approval. Main Concerns: 1. Lack of Transparency: The significant redactions in the proposal's accompanying materials, such as Exhibit 5, hinder public review and prevent meaningful feedback. 2. Risk Management Implications: The proposal's focus on reducing margin requirements appears to shield Clearing Members from the consequences of risky trades during volatile market conditions, potentially undermining market stability. 3. Conflict of Interest: The role of the Financial Risk Management (FRM) Officer in protecting both the OCC and Clearing Members from failure presents a conflict of interest that may compromise risk management effectiveness. Recommendations: 1. Loss Allocation Framework: Prioritize Clearing Fund deposits over the OCC's pre-funded resources in the loss allocation framework to enhance market stability and incentivize responsible risk management by Clearing Members. 2. Independent Review Mechanism: Implement an independent review mechanism to ensure impartial evaluation of control settings and mitigate potential conflicts of interest. Additional Safeguards and Modifications: 1. Enhanced Transparency: Provide non-confidential summaries of redacted materials to increase transparency and facilitate public understanding and feedback. 2. Strengthened Oversight Mechanisms: Enhance oversight mechanisms and incorporate public input in decision-making processes to promote accountability and market integrity. 3. Industry-Wide Standards: Collaborate with stakeholders to establish industry-wide standards and best practices that prioritize fairness, transparency, and market stability. Conclusion: I urge the SEC to consider these concerns and recommendations during the rulemaking process to foster a financial environment that prioritizes fairness, transparency, and resilience. Thank you for the opportunity to provide feedback.