FIA has responded to the Options Clearing Corporation’s proposed rule change that introduces a margin add-on charge aimed at mitigating risks from intraday and overnight trading, particularly for zero-days-to-expiration (0DTE) options.
In its comment letter, FIA acknowledges the need for stronger risk management but expresses concerns over the design and potential consequences of the OCC proposal. FIA believes that the current backward-looking, monthly-calibrated margin add-on falls short of providing adequate risk mitigation and should only serve as a temporary measure while a more precise and transparent system is developed.
The letter outlines FIA’s concerns, including the proposal's complexity and its disproportionate impact on smaller clearing members, who may face unpredictable intraday margin calls and liquidity strains.
Additionally, FIA highlights several issues surrounding the allocation of the new margin requirements, the lack of transparency about the specific impact of the proposal on clearing members and clients, and the lack of appropriate risk assessment, especially for execution-only brokerage services. FIA calls for greater transparency, detailed impact analysis and a collaborative approach to developing a more effective long-term solution.
Read the comment letter in full.
