Notice2026-02121
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Exchange's Fee Schedule To Adopt a New Methodology for Assessment and Collection of the Options Regulatory Fee (ORF)
Primary source
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
February 3, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 22 (Tuesday, February 3, 2026)</title>
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[Federal Register Volume 91, Number 22 (Tuesday, February 3, 2026)]
[Notices]
[Pages 4985-4989]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-02121]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104745; File No. SR-MEMX-2026-02]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend the
Exchange's Fee Schedule To Adopt a New Methodology for Assessment and
Collection of the Options Regulatory Fee (ORF)
January 29, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 28, 2026, MEMX LLC (``MEMX'' 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 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\ 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 is filing with the Commission a proposed rule change
to amend the Exchange's fee schedule related to the Options Regulatory
Fee (``ORF'') to adopt a new methodology for assessment and collection
of ORF for transactions that occur on the Exchange (``On-Exchange
ORF''). The text of the proposed rule change is provided in Exhibit 5.
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 Exchange 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 these statements may be examined at the places specified in
Item IV below. The
[[Page 4986]]
Exchange has prepared summaries, set forth in sections A, B, and C
below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its current assessment and
collection of a regulatory fee to assess On-Exchange ORF only for
options transactions that occur on the Exchange that would clear in the
customer \3\ range at The Options Clearing Corporation (``OCC''). The
Exchange would no longer assess a regulatory fee for options
transactions that occur on other exchanges. This proposal only proposes
to amend the method of assessment and collection of the fee. A future
rule filing would be filed to set the applicable On-Exchange ORF rate
in advance of assessing and collecting it under the proposed method.
The following provides more detail regarding the proposal.
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\3\ Currently, the ORF is assessed by MEMX Options and collected
via OCC on executions for the account of Public Customers, including
Professionals, and Broker-Dealers including Foreign Broker-Dealers.
These market participants clear in the ``C'' range at OCC. ORF will
continue to be assessed to executions for the account of these
market participants under the proposed methodology. On the Exchange,
a ``Public Customer'' means a person that is not a broker or dealer
in securities and includes both Priority Customers and
Professionals. A ``Priority Customer'' means a person or entity that
is a Public Customer and is not a Professional. A ``Professional''
is any person or entity that (a) is not a broker or dealer in
securities, and (b) places more than 390 orders in listed options
per day on average during a calendar month for its own beneficial
account(s). Executions for the account of an OCC clearing member
firm proprietary account, joint back office account clearing in the
Firm range, or account of a market maker clearing in the Market
Maker range are not charged an ORF, nor would they be charged an ORF
under the current proposal.
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Background
Today, ORF is assessed by MEMX to each Member for all options
transactions, cleared or ultimately cleared by the Member in the
``customer'' range, regardless of the exchange on which the transaction
occurs. The ORF is collected by OCC on behalf of the Exchange from
either: (1) a Member that was the ultimate clearing firm \4\ for the
transaction; or (2) a non-Member that was the ultimate clearing firm
where a Member was the executing clearing firm \5\ for the transaction.
The Exchange uses reports from OCC to determine the identity of the
executing clearing firm and ultimate clearing firm. Pursuant to a
separately filed rule change, the current ORF rate of $0.0015 will
sunset as of June 30, 2026.\6\
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\4\ The Exchange takes into account any CMTA transfers when
determining the ultimate clearing firm for a transaction. CMTA or
Clearing Member Trade Assignment is a form of ``give up'' whereby
the position will be assigned to a specific clearing firm at the
OCC.
\5\ Throughout this filing, ``executing clearing firm'' means
the clearing firm through which the entering broker indicated that
the transaction would be cleared at the time it entered the original
order which executed, and that clearing firm could be a designated
``give up'', if applicable. The executing clearing firm may be the
ultimate clearing firm if no CMTA transfer occurs. If a CMTA
transfer occurs, however, the ultimate clearing firm would be the
clearing firm that the position was transferred to for clearing via
CMTA.
\6\ See Securities Exchange Act Release No. 104608 (January 14,
2026) 91 FR 2393 (January 20, 2026) (SR-MEMX-2025-36). Further, in
order to avoid confusion, the Exchange is proposing to delete the
language on the Fee Schedule that states that the ORF will
automatically sunset on June 30, 2026, and replace it with a header
above the current ORF that states ``Effective through June 30,
2026''. The Exchange is proposing to describe the On Exchange ORF
methodology below this section, with the header ``Effective as of
July 1, 2026''.
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To illustrate how the ORF is assessed and collected, the Exchange
provides the following set of examples.
1. For all transactions executed on the Exchange, if the ultimate
clearing firm is a Member of the Exchange, the ORF is assessed to and
collected from that Member. If the ultimate clearing firm is not a
Member of the Exchange, the ORF is collected from that non-Member
clearing firm but assessed to the executing clearing firm.
2. If the transaction is executed on an away exchange, the ORF is
only assessed and collected if either the executing clearing firm or
ultimate clearing firm are Members of the Exchange. If the ultimate
clearing firm is a Member of the Exchange, the ORF is assessed to and
collected from that ultimate clearing firm. If the ultimate clearing
firm is not a Member of the Exchange, the ORF is assessed to the
executing clearing firm (again, only if that executing clearing firm is
a Member of the Exchange), and collected from the ultimate clearing
firm. Thus, to reiterate, if neither the executing clearing firm nor
the ultimate clearing firm are members of the Exchange, no ORF is
assessed or collected.
Finally, the Exchange does not assess the ORF on outbound linkage
trades. ``Linkage trades'' are tagged in the Exchange's system, so the
Exchange can distinguish them from other trades.
ORF Revenue and Monitoring of ORF
Today, revenue generated from ORF, when combined with all of the
Exchange's other regulatory fees and fines, is designed to recover a
material portion of the regulatory costs to the Exchange of the
supervision and regulation of Member customer options business
including performing routine surveillances, investigations,
examinations, financial monitoring, and policy, rulemaking,
interpretive, and enforcement activities. Regulatory costs include
direct regulatory expenses and certain indirect expenses for work
allocated in support of the regulatory function. The direct expenses
include in-house and third-party service provider costs to support the
day-to- day regulatory work such as surveillances, investigations and
examinations. The indirect expenses include support to the regulatory
function from such areas as human resources, legal, compliance,
information technology, facilities and accounting as well as shared
costs necessary to operate the Exchange to carry out its regulatory
function, such as hardware, data center costs, and connectivity. Today,
these indirect expenses are estimated to be approximately 20% of the
Exchange's total regulatory costs for 2026. Thus, direct expenses are
estimated to be approximately 80% of total regulatory costs for
2026.\7\ In addition, based on the Exchange's analysis of its
regulatory work associated with options regulation, and considering
other regulatory revenue, it is the Exchange's practice that revenue
generated from ORF not exceed 75% of total annual regulatory costs.
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\7\ These expectations are estimated and may be subject to
change.
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Proposal for On-Exchange ORF
MEMX appreciates the evolving changes in the market and regulatory
environment and has been evaluating its current methodologies and
practices for the assessment and collection of ORF while considering
industry and Commission feedback. As a result of this review, the
Exchange is proposing the On-Exchange ORF, which assesses a regulatory
fee to only Exchange transactions that would clear in the Customer
range at OCC (as is the case today).\8\ The following scenarios reflect
how the On-Exchange ORF will be assessed and collected:
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\8\ See supra note 4.
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1. If a Member is the executing clearing firm on a transaction that
occurred on the Exchange, the fee would be assessed to and collected
from that Member by OCC on behalf of the Exchange.
2. If a Member is the executing clearing firm and the transaction
is ``given up'' to a clearing give-up (the ``clearing firm''), the On-
Exchange ORF is assessed to the executing clearing
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firm, (the On-Exchange ORF remains the obligation of the executing
clearing firm under the proposal), but the On-Exchange ORF will be
collected from the clearing firm, regardless of whether that clearing
firm is a Member of the Exchange.
The Exchange expects to provide Members sufficient information in
connection with their invoice in order to reconcile charges associated
with ORF. In addition, the proposed method for collecting On-Exchange
ORF will only consider CMTAs reported to the Exchange and not those
reported directly to OCC. As described above, today's ORF is the
responsibility of the executing clearing firm and collected from the
CMTA ultimate clearing firm (which may be a non-Member) as an
administrative convenience. The Exchange understands that a CMTA may be
added at order entry, via post-trade edit on the Exchange, or post-
trade at OCC. CMTA transfers that occur at OCC do not necessarily
contain reliable information regarding the Exchange on which the
original transaction occurred.\9\ Without specific information as to
where the original transaction occurred, the Exchange would not be able
to accurately account for CMTA transfers that occur at OCC. Therefore,
the Exchange will only account for CMTAs that occur on the Exchange
(which may be a non-Member) and exclude CMTAs occurring at OCC.\10\
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\9\ Under the current methodology for assessing ORF, the
Exchange on which the transaction occurred is irrelevant.
\10\ Adjustments that were made the same day as the trade on
MEMX will be taken into account.
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With this proposal, the Exchange intends to collect ORF under its
current methodology for assessment and collection of ORF until at least
June 30, 2026. The Exchange is prepared to implement On-Exchange ORF
effective July 1, 2026 if by April 1, 2026 all U.S. options exchanges
charging an ORF have filed to modify their current methodologies of
assessment of the fee to limit the fee to transactions occurring on
their respective exchange.\11\ However, if all other options exchanges
have not filed to adopt a similar methodology by April 1, the Exchange
will delay implementation commensurate with the additional time
required for other options exchanges to adopt a similar method for
collection and assessment of ORF. The Exchange will at that time file a
separate rule filing with the amount of the On-Exchange ORF in advance
of assessing and collecting the fee under the proposed method. As is
the case today, the Exchange will notify Members via Regulatory
Circular of the applicable On-Exchange ORF rate at least 30 calendar
days prior to the effective date of the change. The Exchange believes a
fee to recover a material portion of costs for regulatory programs
associated with monitoring activities is reasonable; however, the
Exchange would consider alternative approaches for assessment and
collection of the fee in order to achieve consistency across the
industry.
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\11\ The Exchange estimates it will take approximately three
months to implement the system changes associated with On-Exchange
ORF.
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The Exchange will continue to monitor the amount of revenue
collected from On-Exchange ORF to ensure that it, in combination with
its other regulatory fees and fines, does not exceed the Exchange's
total regulatory costs. Further, the Exchange expects to continue its
current practice that revenue generated from On-Exchange ORF not exceed
75% of total annual regulatory costs. And as is the Exchange's practice
today, revenue generated by On-Exchange ORF will not be used for non-
regulatory purposes.
The Exchange will continue to monitor its regulatory costs and
revenues at a minimum on a semi-annual basis. If the Exchange
determines regulatory revenues exceed or are insufficient to cover a
material portion of its regulatory costs in a given year, the Exchange
will adjust the On-Exchange ORF by submitting a fee change filing to
the Commission. The Exchange will notify Members of adjustments to the
On-Exchange ORF via an Exchange Notice in advance of any change.
2. Statutory Basis
The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \12\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \13\ in
particular, in that it is an equitable allocation of reasonable dues,
fees, and other charges among its members and issuers and other persons
using its facilities. The Exchange also believes the proposal furthers
the objectives of Section 6(b)(5) of the Act \14\ in that it is
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general to protect investors and the
public interest and is not designed to permit unfair discrimination
between customers, issuers, brokers and dealers.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4).
\14\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed change to assess and
collect an On-Exchange ORF is reasonable, equitable and not unfairly
discriminatory for various reasons. First, On-Exchange ORF is
reasonable, equitable and not unfairly discriminatory in that it is
charged to all Exchange transactions that clear in the Customer range
at the OCC. Similar to ORF today, the Exchange believes On-Exchange ORF
ensures fairness by assessing a specific fee to those Members that
require more Exchange regulatory services based on the amount of
customer options business they conduct. Over recent years, options
trading volume has increased with a growing percentage of the volume
applicable to customer transactions. Customers trading on the Exchange
(through a Member) benefit from the protections of a robust regulatory
program including the maintenance of fair and orderly markets and
protections against fraud and other manipulation. The Exchange believes
it is equitable and not unfairly discriminatory to assess a regulatory
fee to transactions that clear in the Customer range to cover
regulatory costs, but not to transactions clearing in the Firm or
Market Maker range because Clearing Members and Market Makers (who
clear in the Firm and Market Maker range), as those market participants
are generally subject to other Exchange fees, fines and obligations.
For example, Clearing Members and Market Makers \15\ are required to
pay Exchange application fees, permit fees and connectivity fees,
amongst others. In addition, all fines issued by the Exchange for
regulatory infractions are assessed only to Members and would be
applied to regulatory revenues. As with today's ORF, the Exchange
expects that Members from whom On-Exchange ORF is collected will pass
through the fee to their customers (as the Exchange understands occurs
today). In addition, Market Makers in particular are subject to various
quoting and other obligations to ensure that they provide stable and
liquid markets, which benefit all market participants including
customers. Excluding Market Maker transactions from On-Exchange
Exchange ORF will allow Market Makers to better manage their costs more
effectively thus enabling them to better allocate resources toward
technology, risk
[[Page 4988]]
management, and capacity to ensure continued liquidity provision.
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\15\ Market Maker means a Member registered with the Exchange
for the purpose of making markets in options contracts traded on the
Exchange and that is vested with the rights and responsibilities
specified in Chapter 22 of the Exchange Rules. See Exchange Rule
16.1.
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In addition to the overall increase in Customer-range volume
generally, regulating customer trading activity is more labor intensive
and requires greater expenditure of human and technical resources than
regulating non-customer trading activity, which tends to be more
automated and less labor-intensive. For example, there are costs
associated with main office and branch office examinations (e.g., staff
and travel expenses), as well as investigations into customer
complaints and terminations of registered persons. 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.,
Clearing Member proprietary transactions) of its regulatory
program.\16\ While the Exchange notes that it has broad regulatory
responsibilities with respect to its Members' activities, irrespective
of where their transactions take place, the Exchange believes it is
reasonable to assess the proposed fee to only those transactions
occurring on the Exchange. The proposed change more narrowly tailors
the fee to products and transactions with a direct connection to the
Exchange. With this proposal, transactions that would clear in the
Customer range occurring on other exchanges would no longer be subject
to an ORF assessed by the Exchange.
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\16\ If the Exchange changes its method of funding regulation or
if circumstances otherwise change in the future, the Exchange may
decide to modify On-Exchange ORF or assess a separate regulatory fee
on Member proprietary transactions if the Exchange deems advisable.
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The Exchange believes it is equitable and not unduly discriminatory
to modify the method of collecting the fee such that On-Exchange ORF
will not consider CMTAs reported directly to OCC as is done in today's
method of ORF. CMTA transfers are considered today under the current
collection methodology for ORF as a convenience to industry members in
administering a pass through of the fee to their customers. Limiting
the On-Exchange ORF to transactions on the Exchange poses a limitation
in the use of CMTA for this purpose. The Exchange understands that a
CMTA may be added at order entry, via post-trade edit on the Exchange,
or post-trade at OCC. CMTA transfers that occur at OCC do not
necessarily contain reliable information regarding the Exchange on
which the original transaction occurred.\17\ Without specific
information as to where the original transaction occurred, the Exchange
would not be able to accurately account for CMTA transfers that occur
at OCC.
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\17\ Under the current methodology for assessing ORF, the
Exchange on which the transaction occurred is irrelevant.
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The Exchange further believes that the proposed change to the
method for assessment and collection of the fee is reasonable because
it would help ensure that revenue collected from the On-Exchange ORF,
in combination with other regulatory fees and fines, would help offset,
but not exceed, the Exchange's total regulatory costs.
As discussed, On-Exchange ORF is similarly designed to the current
ORF, in that revenues generated from the fee would be less than or
equal to 75% of the Exchange's regulatory costs, which is consistent
with the practice across the options industry today and the view of the
Commission that regulatory fees be used for regulatory purposes and not
to support the Exchange's business side.
As noted above, the Exchange will also continue to monitor on at
least a semi-annual basis the amount of revenue collected from the On-
Exchange ORF, even as amended, to ensure that it, in combination with
its other regulatory fees and fines, does not exceed the Exchange's
total regulatory costs. If the Exchange determines regulatory revenues
would exceed its regulatory costs in a given year, the Exchange will
reduce the On-Exchange ORF by submitting a fee change filing to the
Commission.
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. This proposal will not
create an unnecessary or inappropriate intra-market burden on
competition because On-Exchange ORF applies to all customer activity on
the Exchange, thereby raising regulatory revenue to offset regulatory
expenses. It also supplements the regulatory revenue derived from non-
customer activity. The Exchange notes, however, the proposed change is
not designed to address any competitive issues. Indeed, this proposal
does not create an unnecessary or inappropriate inter-market burden on
competition because it is a regulatory fee that supports regulation in
furtherance of the Act. The Exchange is obligated to ensure that the
amount of regulatory revenue collected from the On-Exchange ORF, in
combination with its other regulatory fees and fines, does not exceed
regulatory costs. In addition, the Exchange will not implement the On-
Exchange ORF until all other options exchanges are prepared to adopt a
similar model to avoid overlapping ORFs.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on 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)(ii) of the Act \18\ and Rule 19b-4(f)(2) \19\ thereunder.
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\18\ 15 U.S.C. 78s(b)(3)(A)(ii).
\19\ 17 CFR 240.19b-4(f)(2).
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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 shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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#85f7f0e9e0a8e6eae8e8e0ebf1f6c5f6e0e6abe2eaf3"><span class="__cf_email__" data-cfemail="b5c7c0d9d098d6dad8d8d0dbc1c6f5c6d0d69bd2dac3">[email protected]</span></a>. Please include
file number SR-MEMX-2026-02 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-MEMX-2026-02. This file
number should be included on the subject line if email is used. To help
the Commission process and review your
[[Page 4989]]
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-MEMX-2026-02 and should
be submitted on or before February 24, 2026.
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. 2026-02121 Filed 2-2-26; 8:45 am]
BILLING CODE 8011-01-P
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