Notice2025-13900
Self-Regulatory Organizations; NYSE Arca, Inc.; 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 34942-34945]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-13900]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103506; File No. SR-NYSEARCA-2025-52]
Self-Regulatory Organizations; NYSE Arca, Inc.; 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 Arca, Inc. (``NYSE Arca'' 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 Arca 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 (NYSEARCA-2025-49) 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 OTP Holders and OTP Firms
(collectively, ``OTP 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 Bylaws of NYSE
Arca, Inc., Art. II, Sec. 2.03.
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The ORF is assessed on OTP Holders for options transactions that
are cleared by the OTP Holder through the Options Clearing Corporation
(``OCC'') in the
[[Page 34943]]
Customer range regardless of the exchange on which the transaction
occurs and is collected from OTP Holder clearing firms by the OCC on
behalf of NYSE Arca.\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 OTP Holders with respect to Customer trading activity are
generally higher than the costs associated with monitoring OTP Holders
that do not engage in Customer trading activity, which tends to be more
automated and less labor-intensive. By contrast, regulating OTP 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 OTP 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.,
OTP Holder proprietary transactions) of its regulatory program.
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\6\ See Fee Schedule, NYSE Arca GENERAL OPTIONS and TRADING
PERMIT (OTP) FEES, Regulatory Fees, Options Regulatory Fee
(``ORF''), available here, <a href="https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_Options_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/markets/arca-options/NYSE_Arca_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 OTP
Holder is not assessed the fee until it has satisfied applicable
technological requirements necessary to commence operations on NYSE
Arca. 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 OTP
Holders will likely increase as well. Similarly, if options
transactions reported to OCC in a given month decrease, the ORF
collected from OTP 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 OTP 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, NYSE
Arca GENERAL OPTIONS and TRADING PERMIT (OTP) FEES, Regulatory Fees,
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. 101868 (December
10, 2024), 89 FR 101650 (December 16, 2024) (SR-NYSEARCA-2024-90)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Amend the NYSE Arca 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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[[Page 34944]]
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, NYSE Arca GENERAL OPTIONS
and TRADING PERMIT (OTP) FEES, Regulatory Fees, 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 OTP 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 (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 OTP 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 OTP 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 OTP 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 OTP 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 OTP Holders
with 30 days' advance notice of the planned
[[Page 34945]]
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 OTP 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 OTP 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 OTP 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 OTP
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 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#ed9f988188c08e8280808883999ead9e888ec38a829b"><span class="__cf_email__" data-cfemail="255750494008464a4848404b5156655640460b424a53">[email protected]</span></a>. Please include
file number SR-NYSEARCA-2025-52 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-NYSEARCA-2025-52. 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-NYSEARCA-2025-52 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. 2025-13900 Filed 7-23-25; 8:45 am]
BILLING CODE 8011-01-P
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