Notice2025-13894
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Temporarily Lower the Options Regulatory Fee (ORF)
Primary source
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Published
July 24, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 140 (Thursday, July 24, 2025)</title>
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[Federal Register Volume 90, Number 140 (Thursday, July 24, 2025)]
[Notices]
[Pages 34939-34942]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13894]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103507; File No. SR-NYSEAMER-2025-42]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Temporarily Lower the Options Regulatory Fee (ORF)
July 21, 2025.
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 July 16, 2025, NYSE American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. 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 amend the NYSE American Options Fee
Schedule (``Fee Schedule'') regarding the Options Regulatory Fee
(``ORF''). The proposed rule change is available on the Exchange's
website at <a href="http://www.nyse.com">www.nyse.com</a> and at the principal office of the Exchange.
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 to amend the Fee Schedule to temporarily
decrease the ORF from $0.0038 per contract to $0.0023 per contract,
effective July 16, 2025.\4\
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\4\ On July 1, 2025, the Exchange filed to amend the Fee
Schedule (NYSEAMER-2025-39) and withdrew such filing on July 16,
2025.
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Background
As a general matter, the Exchange may only use regulatory funds
such as the ORF ``to fund the legal, regulatory, and surveillance
operations'' of the Exchange.\5\ More specifically, the ORF is designed
to recover a material portion, but not all, of the Exchange's costs for
the supervision and regulation of ATP Holders, including the Exchange's
regulatory program and legal expenses associated with options
regulation, such as the costs related to in-house staff, third-party
service providers, and technology that facilitate regulatory functions
such as surveillance, investigation, examinations, and enforcement
(collectively, the ``ORF Costs''). ORF funds may also be used for
indirect expenses such as human resources and other administrative
costs. The Exchange monitors the amount of revenue collected from the
ORF to ensure that this revenue, in combination with other regulatory
fees and fines, does not exceed regulatory costs.
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\5\ The Exchange considers surveillance operations part of
regulatory operations. The limitation on the use of regulatory funds
also provides that they shall not be distributed. See Thirteenth
Amended and Restated Operating Agreement of NYSE American LLC,
Article IV, Section 4.05 and Securities Exchange Act Release No.
87993 (January 16, 2020), 85 FR 4050 (January 23, 2020) (SR-
NYSEAMER-2020-04).
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The ORF is assessed on ATP Holders for options transactions that
are cleared by the ATP Holder through the Options Clearing Corporation
(``OCC'') in the Customer range regardless of the exchange on which the
transaction occurs and is collected from ATP Holder clearing firms by
the OCC on behalf of NYSE American.\6\ All options transactions must
clear via a clearing firm and such clearing firms can then choose to
pass through all, a portion, or none of the cost of the ORF to its
customers, i.e., the entering firms. The Exchange notes that the costs
relating to monitoring ATP Holders with respect to Customer trading
activity are generally higher than the costs associated with monitoring
ATP Holders that do not engage in Customer trading activity, which
tends to be more automated and less labor-intensive. By contrast,
regulating ATP Holders that engage in Customer trading activity is
generally more labor intensive and requires a greater expenditure of
human and technical resources as the Exchange needs to review not only
the trading activity on behalf of Customers, but also the ATP Holder's
relationship with its Customers via more labor-intensive exam-based
programs.\7\ As a result, the costs associated with administering the
customer component of the Exchange's overall regulatory program are
materially higher than the costs associated with administering the non-
customer component (e.g., ATP Holder proprietary transactions) of its
regulatory program.
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\6\ See Fee Schedule, Section VII.A., Options Regulatory Fee
(``ORF''), available here, <a href="https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/markets/american-options/NYSE_American_Options_Fee_Schedule.pdf</a>. The
Exchange uses reports from OCC when assessing and collecting the
ORF. The ORF is not assessed on outbound linkage trades. An ATP
Holder is not assessed the fee until it has satisfied applicable
technological requirements necessary to commence operations on NYSE
American. See id.
\7\ The Exchange notes that many of the Exchange's market
surveillance programs require the Exchange to look at and evaluate
activity across all options markets, such as surveillance for
position limit violations, manipulation, front-running, and contrary
exercise advice violations/expiring exercise declarations. The
Exchange and other options SROs are parties to a 17d-2 agreement
allocating among the SROs regulatory responsibilities relating to
compliance by the common members with rules for expiring exercise
declarations, position limits, OCC trade adjustments, and Large
Option Position Report reviews. See, e.g., Securities Exchange Act
Release No. 85097 (February 11, 2019), 84 FR 4871 (February 19,
2019).
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Because the ORF is based on options transactions volume, the amount
of ORF collected is variable. For example, if options transactions
reported to OCC in a given month increase, the ORF collected from ATP
Holders will likely increase as well. Similarly, if options
transactions reported to OCC in a given month decrease, the ORF
collected from
[[Page 34940]]
ATP Holders will likely decrease as well. Accordingly, the Exchange
monitors the amount of ORF collected to ensure that it does not exceed
a material portion of ORF Costs. If the Exchange determines the amount
of ORF collected exceeds or may exceed a material portion of ORF Costs,
the Exchange will, as appropriate, adjust the ORF by submitting a fee
change filing to the Securities and Exchange Commission (the
``Commission''). Exchange rules establish that market participants must
be notified of any change in the ORF via Trader Update at least 30
calendar days prior to the effective date of the change.\8\
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\8\ See Fee Schedule, supra note 6.
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Proposed Rule Change
Based on the Exchange's recent review of regulatory costs, ORF
collections, and options transaction volume, the Exchange proposes to
temporarily decrease the amount of ORF collected from $0.0038 per
contract to $0.0023 per contract, effective July 1, 2025.\9\ This
proposed decrease will help ensure that the amount collected from the
ORF, in combination with other regulatory fees and fines, does not
exceed the Exchange's total regulatory costs. On May 30, 2025, the
Exchange notified ATP Holders of the proposed change via Trader Update
(i.e., at least 30 calendar days prior to the July 1st operative date)
to afford market participants sufficient opportunity to configure their
systems to account properly for the modified ORF.\10\
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\9\ The Exchange proposes to have an automatic sunset of the
proposed fee on December 31, 2025. See proposed Fee Schedule,
Section VII.A., Options Regulatory Fee (``ORF'').
\10\ See <a href="https://www.nyse.com/trader-update/history#110000949347">https://www.nyse.com/trader-update/history#110000949347</a>.
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The proposed change to the ORF is based on the Exchange's analysis
of recent options volumes and its regulatory costs. The Exchange
believes that, if the ORF is not adjusted, the ORF revenue to the
Exchange year over year could exceed a material portion of the
Exchange's ORF Costs. Over the past few years, the options industry has
experienced high options trading volumes and volatility and, although
the Exchange waived the ORF for the last two months of 2024,\11\ the
persisting increased options volumes have impacted the Exchange's ORF
collection.
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\11\ See Securities Exchange Act Release No. 101866 (December
10, 2024), 89 FR 101674 (December 16, 2024) (SR-NYSEAMER-2024-63)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Amend the NYSE American Options Fee Schedule To Modify the
Options Regulatory Fee).
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The table below reflects industry data from OCC and illustrates
that both total average daily volume and customer average daily volume
in 2025 increased over the already elevated levels in 2023 and
2024.\12\
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\12\ The OCC publishes options and futures volume in a variety
of formats, including daily and monthly volume by exchange,
available here: <a href="https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics">https://www.theocc.com/Market-Data/Market-Data-Reports/Volume-and-Open-Interest/Monthly-Weekly-Volume-Statistics</a>.
The volume discussed in this filing is based on a compilation of OCC
data for monthly volume of equity-based options and monthly volume
of ETF-based options, in contract sides.
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2023 2024 2025 YTD
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Customer ADV........................................... 35,327,417 39,365,049 46,831,086
Total ADV.............................................. 40,368,590 44,360,426 53,043,204
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In addition, as shown in the table below, during 2025, options
trading volumes have remained elevated and volatility has
persisted.\13\
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\13\ See id.
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Jan. 2025 Feb. 2025 Mar. 2025 Apr. 2025 May 2025
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Customer ADV............................................. 46,758,284 48,508,333 46,281,134 47,786,196 46,234,519
Total ADV................................................ 53,134,932 54,563,396 53,182,376 55,339,630 51,351,579
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Because of the sustained impact of the trading volumes that have
persisted through mid-2025, along with the difficulty of predicting
whether and when volumes may return to historical levels, the Exchange
proposes to temporarily decrease the ORF from July 1 through December
31, 2025, to help ensure that ORF collection will not exceed ORF Costs
for 2025.\14\ The Exchange cannot predict whether options volumes will
remain at these levels going forward and projections for future
regulatory costs are estimated, preliminary, and may change. However,
the Exchange believes that the proposed change to the ORF would allow
the Exchange to continue to monitor the amount collected from the ORF
to help ensure that ORF collection, in combination with other
regulatory fees and fines, does not exceed regulatory costs for 2025.
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\14\ After December 31, 2025, the Exchange proposes that the ORF
rate automatically revert to $0.0038 per contract (the ``sunset
provision''). See proposed Fee Schedule, Section VII.A., Options
Regulatory Fee (``ORF'').
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Potential ORF Reform
The Exchange appreciates the evolving changes in the markets and
regulatory environment and, in connection with industry and other
feedback, has been evaluating the current methodologies and practices
for the assessment and collection of ORF. The Exchange believes ORF
reform is appropriate, including moving to a model in which ORF would
be assessed only to transactions occurring on the Exchange. This would
allow for consistent industry billing. The Exchange is committed to
switching to a new, modified model as soon as a consistent framework
has been established with the SEC, adopted by all the options
exchanges, and necessary regulatory filings submitted. Until that time,
the Exchange believes it is fair and reasonable to temporarily decrease
the current ORF under the existing model.
The Exchange also believes that the potential for ORF reform
provides further support for the sunset provision included in this
proposal because it will allow the Exchange to discuss its anticipated,
or potential alternative, ORF methodology with ATP Holders between July
1 and December 31, 2025 (i.e., the sunset date).\15\
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\15\ The Exchange notes that the existence of the proposed
sunset date would not preclude the Exchange from filing to modify
its ORF methodology prior to that date.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) \16\ of the Act, in general, and
Section 6(b)(4) and
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(5) \17\ of the Act, in particular, in that it is designed to provide
for the equitable allocation of reasonable dues, fees, and other
charges among its members and other persons using its facilities and
does not unfairly discriminate between customers, issuers, brokers, or
dealers.
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\16\ 15 U.S.C. 78f(b).
\17\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposal Is Reasonable
The Exchange believes the proposed rule change is reasonable
because it would help ensure that collections from the ORF do not
exceed a material portion of the Exchange's ORF Costs. As noted above,
the ORF is designed to recover a material portion, but not all, of the
Exchange's ORF Costs.
Although there can be no assurance that the Exchange's final costs
for 2025 will not differ materially from its expectations and prior
practice, nor can the Exchange predict with certainty whether options
volume will remain at current or similar levels going forward, the
Exchange believes that the amount collected based on the current ORF
rate, when combined with regulatory fees and fines, may result in
collections in excess of the estimated ORF Costs for the year.
Particularly, as noted above, the options market has continued to
experience elevated volumes and volatility in 2025, thereby resulting
in higher ORF collections than projected. The Exchange therefore
believes that the proposed temporary decrease to the ORF is reasonable
because it would help ensure that ORF collection does not exceed the
ORF Costs for 2025. Particularly, the Exchange believes that this
temporary reduction in the ORF, taken together with the Exchange's
other regulatory fees and fines, would allow the Exchange to continue
covering a material portion of ORF Costs, while lessening the potential
for generating excess funds that may otherwise occur using the current
rate. Per the sunset provision, the Exchange proposes to resume
assessing its current ORF (i.e., $0.0038 per contract) after December
31, 2025. The Exchange believes that resumption of the ORF at the
current rate on January 1, 2026 (unless the Exchange determines it
necessary to adjust the ORF rate to help ensure that ORF collections do
not exceed ORF Costs) is reasonable because it would permit the
Exchange to resume collecting an ORF that is designed to recover a
material portion, but not all, of the Exchange's projected ORF Costs.
The Exchange's proposal to revert to its current ORF rate after
December 31, 2025 is based on the Exchange's estimated projections for
its regulatory costs, which are currently projected to increase in
2026, balanced with the increase in options volumes that has persisted
into 2025 and that may continue into 2026.
The Exchange will continue to monitor ORF Costs in advance of the
sunset date (i.e., December 31, 2025) and, if necessary, based on
projected volumes and ORF Costs, will adjust the ORF rate to help
ensure that ORF collections would not exceed a material portion of ORF
Costs, adjust the ORF by submitting a proposed rule change and
notifying ATP Holders of such change by Trader Update.
The Proposal Is an Equitable Allocation of Fees
The Exchange believes its proposal is an equitable allocation of
fees among its market participants. The Exchange believes that the
proposed rule change would not place certain market participants at an
unfair disadvantage because it would apply equally to all ATP Holders
on all their transactions that clear in the Customer range at the OCC
and would allow the Exchange to continue to monitor the amount
collected from the ORF to help ensure that ORF collection, in
combination with other regulatory fees and fines, does not exceed
regulatory costs. The Exchange also believes that reverting to the
existing ORF after December 31, 2025, unless the Exchange determines it
necessary to adjust the ORF to ensure that ORF collections do not
exceed a material portion of ORF Costs, is equitable because the ORF
would continue to apply equally to all ATP Holders on options
transactions in the Customer range, at a rate designed to recover a
material portion, but not all, of the Exchange's projected ORF Costs,
based on current projections that such costs will increase in 2026.
The Proposed Fee Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory. The Exchange believes that the proposed temporary
decrease to the ORF rate would not place certain market participants at
an unfair disadvantage because it would apply to all ATP Holders
subject to the ORF and would allow the Exchange to continue to monitor
the amount collected from the ORF to help ensure that ORF collection,
in combination with other regulatory fees and fines, does not exceed
regulatory costs. The Exchange also has provided all such ATP Holders
with 30 days' advance notice of the planned change to the ORF. Further,
the Exchange believes that reverting to the existing ORF after December
31, 2025 (i.e., the sunset date), unless the Exchange determines it
necessary to adjust the ORF to ensure that ORF collections do not
exceed a material portion of ORF Costs, is not unfairly discriminatory
because the Exchange would resume assessing the ORF (at its current
rate) equally to all ATP Holders based on their transactions that clear
in the Customer range at the OCC.
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.
Intramarket Competition. The Exchange believes the proposed change
would not impose an undue burden on intramarket competition because the
ORF is charged to all ATP Holders on all their transactions that clear
in the Customer range at the OCC; thus, the amount of ORF imposed is
based on the amount of Customer volume transacted. The Exchange
believes that the proposed temporary decrease of the ORF would not
place certain market participants at an unfair disadvantage because all
options transactions must clear via a clearing firm. Such clearing
firms can then choose to pass through all, a portion, or none of the
cost of the ORF to its customers, i.e., the entering firms. The ORF is
collected from ATP Holder clearing firms by the OCC on behalf of the
Exchange and is assessed on all options transactions cleared at the OCC
in the Customer range.
The Exchange also believes that reverting to the existing ORF after
December 31, 2025 (i.e., the sunset date)--unless the Exchange
determines it necessary at that time to adjust the ORF to ensure that
ORF collections do not exceed a material portion of ORF Costs--would
not impose an undue burden on competition because it would permit the
Exchange to resume assessing an ORF that is designed to recover a
material portion, but not all, of the Exchange's projected ORF Costs,
based on current projections that such costs will increase in 2026. As
is the case today, the proposed reduced ORF rate would apply to all ATP
Holders on their options transactions that clear in the Customer range
at the OCC, which rate will automatically revert to the current ORF
rate after December 31, 2025.
Intermarket Competition. The proposed fee change is not designed to
address any competitive issues. Rather, the proposed change is designed
to help the Exchange adequately fund its regulatory activities while
seeking to
[[Page 34942]]
ensure that total collections from regulatory fees do not exceed total
regulatory costs.
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 has become effective pursuant to Section
19(b)(3)(A) of the Act \18\ and paragraph (f) of Rule 19b-4 \19\
thereunder. At any time within 60 days of the filing of the 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 will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f).
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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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#295b5c454c044a4644444c475d5a695a4c4a074e465f"><span class="__cf_email__" data-cfemail="c5b7b0a9a0e8a6aaa8a8a0abb1b685b6a0a6eba2aab3">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2025-42 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-NYSEAMER-2025-42. 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to file number SR-NYSEAMER-2025-42 and should be submitted
on or before August 14, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-13894 Filed 7-23-25; 8:45 am]
BILLING CODE 8011-01-P
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