Notice2022-17226
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to the NYSE Equities Proprietary Market Data Fees To Adopt a Professional User Fee Cap and an Enterprise Fee for Broker-Dealer Subscribers of NYSE OpenBook
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 11, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 154 (Thursday, August 11, 2022)</title>
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[Federal Register Volume 87, Number 154 (Thursday, August 11, 2022)]
[Notices]
[Pages 49632-49635]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-17226]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95442; File No. SR-NYSE-2022-36]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
the NYSE Equities Proprietary Market Data Fees To Adopt a Professional
User Fee Cap and an Enterprise Fee for Broker-Dealer Subscribers of
NYSE OpenBook
August 5, 2022.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on August 1, 2022, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to the NYSE Equities Proprietary Market Data
Fees (``Fee Schedule'') to establish a Professional User Fee Cap and an
Enterprise Fee for Broker-Dealer subscribers of NYSE OpenBook. The
proposed rule change is available on the Exchange's website at
<a href="http://www.nyse.com">www.nyse.com</a>, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes changes to the Fee Schedule to establish a
Professional User Fee Cap and an Enterprise Fee for Broker-Dealer
subscribers of NYSE OpenBook. The Exchange proposes to make these fee
changes operative on August 1, 2022.
The Exchange currently offers a Non-Professional User Fee Cap for
broker-dealers that are subscribers of NYSE OpenBook at $25,000 per
month.\4\ To illustrate the application of the Non-Professional User
Fee Cap, absent the fee cap, a broker-dealer with 2,500 external non-
professional users who receives NYSE OpenBook would pay $37,500 per
month in professional user fees (2,500 users at $15 per month).\5\ This
broker-dealer's fees, however, are currently capped at $25,000 per
month.
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\4\ See Securities Exchange Act Release No. 59544 (March 9,
2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131) (Order
Approving Proposed Rule Change To Introduce a NYSE OpenBook
Nonprofessional Subscriber Fee). The Non-Professional User Fee Cap
applies to external users of a broker-dealer subscriber.
\5\ The non-professional user fee for broker-dealer subscribers
of NYSE OpenBook is $15 per month per user. See Fee Schedule,
available here: <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf</a>.
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With this proposed rule change, the Exchange proposes to establish
a Professional User Fee Cap for broker-dealers that are subscribers of
NYSE OpenBook at $35,000 per month for internal and external
professional users to whom the broker-dealer may redistribute NYSE
OpenBook data. To illustrate the application of the proposed
Professional User Fee Cap, a broker-dealer with 5,000 professional
users who receives NYSE OpenBook would pay $300,000 per month in
professional user fees (5,000 users at $60 per month per user).\6\
However, the operation of the proposed cap would cause this broker-
dealer's professional user fees to drop to $35,000 per month.
Subscribers with more than 583 professional users would significantly
[[Page 49633]]
benefit as they would pay less than they would absent the proposed fee
cap.
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\6\ The professional user fees for broker-dealer subscribers of
NYSE OpenBook is $60 per month per user. See Fee Schedule, available
here: <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf</a>.
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Subscribers whose fees are capped are required to count and report
to the Exchange the total number of professional and non-professional
users that are permissioned to receive the data.
Additionally, as part of the Exchange's efforts to ease
administrative burdens on its customers, the Exchange proposes to adopt
an Enterprise Fee for broker-dealers that are subscribers of NYSE
OpenBook at $60,000 per month. The proposed fee is the sum of the Non-
Professional User Fee Cap of $25,000 per month and the proposed
Professional User Fee Cap of $35,000 per month. To illustrate the
application of the proposed Enterprise Fee, a broker-dealer with a
total of 5,000 internal professional users and 2,500 external non-
professional users, would currently be capped at $60,000 per month
($25,000 per month under the Non-Professional User Fee Cap plus $35,000
per month under the proposed Professional User Fee Cap). This broker-
dealer would also not be required to count and report to the Exchange
the number of professional and non-professional users.
Applicability of Proposed Rule Change
The purpose of the Professional User Fee Cap for broker-dealer
subscribers who redistribute NYSE OpenBook to professional users is to
offer an additional subscription method that would limit the amount of
fees paid by such subscriber. The Exchange notes that fee caps have
long been accepted as an economically efficient form of volume discount
for the heaviest users of market data and would allow for a broad
dissemination of the Exchange's market data product. The concept of
adopting a fee cap applicable to broker-dealer subscribers is not
novel.\7\ The Exchange currently has a Non-Professional Fee Cap
applicable to broker-dealers that subscribe to NYSE OpenBook.\8\
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\7\ See e.g., Section 123(c) Enterprise License Fees for Nasdaq
Depth-of-Book Data at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%20Equity%207">https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%20Equity%207</a>.
\8\ See NYSE Equities Proprietary Market Data Fees at <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf</a>.
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The purpose of the Enterprise Fee is to offer customers an
additional subscription method without imposing any new or higher fees,
and to lower the administrative burden on broker-dealer subscribers by
not requiring the broker-dealer to count and report to the Exchange the
number of professional users and non-professional users separately. The
Exchange believes eliminating the distinction between professional
users and non-professional users in a brokerage relationship will
lessen current distinctions among broker-dealers. As proposed, all
broker-dealers that choose to utilize the enterprise license will be
treated the same in that each broker-dealer that chooses an enterprise
license would pay the same amount of the fee without having to count
and report the number of professional users and non-professional users
separately. With the proposed fee change, a broker-dealer subscriber
could choose an enterprise license and would continue to pay the same
amount as it does today and would be able to provide NYSE OpenBook to
internal and external professional and non-professional users at no
additional cost. The proposed change will not increase any fee or
charge to current subscribers.
The proposed Enterprise Fee for NYSE OpenBook will result in a fee
reduction for broker-dealer subscribers with sufficiently large numbers
of professional and non-professional users, as described in the example
above. Broker-dealers that purchase NYSE OpenBook typically have
thousands of users. If a broker-dealer subscriber has a smaller number
of professional and/or non-professional users of NYSE OpenBook, then it
may continue to use the per user fee structure and the fees it pays
will not change. By providing an enterprise license for broker-dealers
with a large number of professional and non-professional users, the
Exchange believes that more broker-dealers may choose to offer NYSE
OpenBook, thereby expanding the distribution of this market data for
the benefit of investors. The Exchange also believes that offering an
enterprise license expands the range of options for offering NYSE
OpenBook and would allow broker-dealers greater choice in selecting the
most appropriate level of data and fees for the professional and non-
professional users they are servicing. As noted above, the concept of
adopting an enterprise license fee is not novel.\9\ In addition, the
Exchange currently has an enterprise license applicable to subscribers
to NYSE BBO and NYSE Trades market data feeds.\10\
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\9\ See e.g., Section 123(c) Enterprise License Fees for Nasdaq
Depth-of-Book Data at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%20Equity%207">https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%20Equity%207</a>.
\10\ See NYSE Equities Proprietary Market Data Fees at <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf</a>.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\11\ in general, and
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ in particular, in that it
provides an equitable allocation of reasonable fees among users and
recipients of the data and is not designed to permit unfair
discrimination among customers, issuers, and brokers.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4), (5).
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In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. Specifically, in Regulation NMS, the
Commission highlighted the importance of market forces in determining
prices and SRO revenues, and also recognized that current regulation of
the market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \13\
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\13\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule).
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With respect to market data, the decision of the United States
Court of Appeals for the District of Columbia Circuit in NetCoalition
v. SEC upheld the Commission's reliance on the existence of competitive
market mechanisms to evaluate the reasonableness and fairness of fees
for proprietary market data:
In fact, the legislative history indicates that the Congress
intended that the market system ``evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed'' and that the SEC wield its regulatory power ``in those
situations where competition may not be sufficient,'' such as in the
creation of a ``consolidated transactional reporting system.'' \14\
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\14\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010)
(quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted in 1975
U.S.C.C.A.N. 323).
The court agreed with the Commission's conclusion that ``Congress
intended that `competitive forces should dictate the services and
practices that constitute the U.S. national market system for trading
equity securities.' '' \15\
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\15\ Id. at 535.
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More recently, the Commission confirmed that it applies a ``market-
[[Page 49634]]
based'' test in its assessment of market data fees, and that under that
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test:
the Commission considers whether the exchange was subject to
significant competitive forces in setting the terms of its proposal
for [market data], including the level of any fees. If an exchange
meets this burden, the Commission will find that its fee rule is
consistent with the Act unless there is a substantial countervailing
basis to find that the terms of the rule violate the Act or the
rules thereunder.\16\
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\16\ See Securities Exchange Act Release No. 34-90217 (October
16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05)
(Order Approving a Proposed Rule Change to Establish Fees for the
NYSE National Integrated Feed) (internal quotation marks omitted),
quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74781 (December 9, 2008) (NYSE ArcaBook Approval
Order).
More specifically, the proposed rule change will expand competition
by providing customers an additional subscription method (without
imposing any new or higher fees) that would cap their fees and reduce
the administrative burden of counting and reporting to the Exchange the
number of professional and non-professional users. With this proposed
rule change, customers will have the ability to choose which
subscription options suits its needs best. For the broker-dealers who
have a large user base of professionals and non-professionals, the
ability to subscribe to an enterprise license would eliminate the
burden of counting and reporting users, as well as the burden to
validate the non-professional user status to ensure accurate non-
professional user count. The enterprise license would also cap the
broker-dealer's device fees for NYSE OpenBook at the enterprise rate.
If a current broker-dealer subscriber has a smaller number of
professional and/or non-professional users of NYSE OpenBook, then it
may continue to use the per user fee structure and the fees it pays
will not change or increase. As proposed, all broker-dealers that
choose to utilize the proposed enterprise license would pay the same
amount of the fee without having to count and report the number of
professional users and non-professional users separately and will not
need to validate non-professional user status.
The Exchange notes that NYSE OpenBook is entirely optional. The
Exchange is not required to make NYSE OpenBook available or to offer
any specific pricing alternatives to any customers, nor is any firm
required to purchase NYSE OpenBook. Unlike some other data products
(e.g., the consolidated quotation and last-sale information feeds) that
firms are required to purchase in order to fulfil regulatory
obligations,\17\ a customer's decision whether to purchase any of the
Exchange's proprietary market data feeds is entirely discretionary.
Firms that do purchase NYSE OpenBook do so for the primary goals of
using the data feed to increase profits, reduce expenses, and in some
instances compete directly with the Exchange (including for order
flow); those firms are able to determine for themselves whether NYSE
OpenBook or any other similar products are attractively priced or not.
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\17\ The Exchange notes that broker-dealers are not required to
purchase proprietary market data to comply with their best execution
obligations. See In the Matter of the Application of Securities
Industry and Financial Markets Association for Review of Actions
Taken by Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-
15350; AP-3-15351 (May 16, 2014). Similarly, there is no requirement
in Regulation NMS or any other rule that proprietary data be
utilized for order routing decisions, and some broker-dealers and
ATSs have chosen not to do so.
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Firms that do not wish to purchase NYSE OpenBook have a variety of
alternative market data products from which to choose. For example, the
Nasdaq Stock Market (``Nasdaq'') provides an enterprise license for the
dissemination of Nasdaq TotalView, which competes with NYSE OpenBook.
More specifically, Nasdaq provides broker-dealer subscribers an
enterprise license that permits internal and external distribution to
both professional and non-professional users for a monthly fee of
$500,000.\18\ Alternatively, if NYSE OpenBook does not provide
sufficient value to firms as offered based on the uses those firms have
or planned to make of it, such firms may simply choose to conduct their
business operations in ways that do not use NYSE OpenBook or use them
at different levels or in different configurations.
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\18\ See Nasdaq TotalView, Enterprise License Option, available
at <a href="http://www.nasdaqtrader.com/Trader.aspx?id=DPUSData">http://www.nasdaqtrader.com/Trader.aspx?id=DPUSData</a>.
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In setting the proposed fees, the Exchange considered the
competitiveness of the market for proprietary data and all of the
implications of that competition. The Exchange believes that it has
considered all relevant factors and has not considered irrelevant
factors in order to establish reasonable fees. The existence of
numerous alternatives to the Exchange's offering, including proprietary
data from other sources, ensures that the Exchange cannot set
unreasonable fees when subscribers can elect these alternatives or
choose not to purchase a specific proprietary data product if the
attendant fees are not justified by the returns that any particular
data recipient would achieve through the purchase.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. As noted above, the proposed
rule change will expand competition by providing customers with an
additional subscription method that would reduce their administrative
burden and cap their fees. Customers that choose to purchase the
proposed enterprise license will benefit from the ability to grow their
use base without paying additional incremental fees, reduced
administrative burden by eliminating the need to validate non-
professional user status, and eliminating the need to count and report
the number of professional and/or non-professional users. Customers
with a small number of professional and non-professional users can
continue to use the per user fee structure and the fees it pays will
not change.
Intramarket Competition. The Exchange believes that the proposed
rule change does not put any market participant at a relative
disadvantage compared to other market participants. As noted above, the
proposed fee schedule would apply to all subscribers of NYSE OpenBook,
and customers may not only choose whether to subscribe to the feed at
all but may tailor their subscription to include only the products and
uses that they deem suitable for their business needs. The Exchange
also believes that the proposed rule change neither favors nor
penalizes one or more categories of market participants in a manner
that would impose an undue market on competition.
Intermarket Competition. The Exchange believes that the proposed
rule change does not impose a burden on competition on other exchanges
that is not necessary or appropriate; indeed, the Exchange believes the
proposal would have the effect of increasing competition by offering
customers additional subscription choices. In setting fees at issue
here, the Exchange is constrained by the fact that, if its pricing is
unattractive to customers, customers will have their pick of an
increasing number of alternative venues to use instead of the Exchange.
Given this competition, no one exchange's market data fees can impose
an unnecessary burden on competition, and the Exchange's proposed fees
do not do so here.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \19\ of the Act and subparagraph (f)(2) of Rule
19b-4 \20\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\21\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#ccbeb9a0a9e1afa3a1a1a9a2b8bf8cbfa9afe2aba3ba"><span class="__cf_email__" data-cfemail="88fafde4eda5ebe7e5e5ede6fcfbc8fbedeba6efe7fe">[email protected]</span></a>. Please include
File Number SR-NYSE-2022-36 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2022-36. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSE-2022-36 and should be submitted on
or before September 1, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17226 Filed 8-10-22; 8:45 am]
BILLING CODE 8011-01-P
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