Notice2026-07487
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 11.9(c)(11) and Rule 11.13(a)(4)(C)-(D) To Describe the Behavior of Non-Displayed Orders
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Published
April 17, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 74 (Friday, April 17, 2026)</title>
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[Federal Register Volume 91, Number 74 (Friday, April 17, 2026)]
[Notices]
[Pages 20760-20763]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07487]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105228; File No. SR-CboeBZX-2026-029]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 11.9(c)(11) and Rule 11.13(a)(4)(C)-(D) To Describe the Behavior
of Non-Displayed Orders
April 14, 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 April 8, 2026, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') is filing
with the Securities and Exchange Commission (``Commission'') a proposal
to amend Rule 11.9(c)(11) and Rule 11.13(a)(4)(C)-(D) to describe the
behavior of Non-Displayed Orders. The
[[Page 20761]]
text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Commission's website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>), the
Exchange's website (<a href="https://www.cboe.com/us/equities/regulation/rule_filings/bzx/">https://www.cboe.com/us/equities/regulation/rule_filings/bzx/</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 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 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 Rule 11.9(c)(11) and Rule
11.13(a)(4)(C)-(D) to describe the behavior of Non-Displayed Orders.
The Commission recently approved a filing by the Exchange's affiliate
exchange, Cboe EDGX Exchange, Inc. (hereinafter ``EDGX'' or ``EDGX
Exchange''), to implement a substantially similar amendment to EDGX
Exchange Rule 11.6(e)(2) and Rule 11.10(a)(4)(C)-(D) in conjunction
with EDGX's proposal to introduce a Retail Price Improvement (``RPI'')
program (the ``EDGX RPI Filing'').\5\ The Exchange proposes to amend
Rule 11.9(c)(11) and Rule 11.13(a)(4)(C) to become substantially
similar to EDGX Exchange Rule 11.6(e)(2) and Rule 11.10(a)(4)(C)-(D),
which as described above, were recently approved by the Commission. The
only differences between the proposed Rules and the EDGX Rules are
references to corresponding rules within the BZX Rulebook that differ
from the EDGX Rulebook. The Exchange is also not proposing to introduce
an RPI Program as was contained in the EDGX RPI Filing.
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\5\ See Securities Exchange Act Release No. 105052 (March 19,
2026), 91 FR 14052 (March 24, 2026) (SR-CboeEDGX-2025-072).
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By way of background, the Exchange currently permits orders to be
entered as Non-Displayed Orders pursuant to Rule 11.9(c)(11). Current
Rule 11.9(c)(11) states that a Non-Displayed Order is ``[a] market or
limit order that is not displayed on the Exchange.'' The Exchange now
proposes to amend Rule 11.9(c)(11) and Rule 11.13(a)(4)(C)-(D) in order
to more accurately describe the price at which a Non-Displayed Order
posts to the BZX Book \6\ and at what price a Non-Displayed Order may
execute in certain situations. The Exchange believes the proposed
amendments to Rule 11.9(c)(11) and Rule 11.13(a)(4)(C)-(D) are
necessary in order to provide market participants with greater
certainty and clarity regarding the current entry and execution of
orders with Non-Displayed instructions on the Exchange. The Exchange
also believes the proposed amendments are necessary to align the rules
of the Exchange with the rules of its affiliate, EDGX Exchange.
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\6\ See Rule 1.5(e). The term ``BZX Book'' shall mean the
System's electronic file of orders.
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Specifically, the Exchange proposes to introduce Rule
11.9(c)(11)(A), which provides that when a Non-Displayed Order is
entered, the Non-Displayed Order will be executed against previously
posted orders on the BZX Book that are priced equal to or better than
the price of the Non-Displayed Order, up to the full amount of such
previously posted orders, unless such executions would trade through a
Protected Quotation.\7\ Any portion of a Non-Displayed Order that
cannot be executed in this manner will be posted to the BZX Book,
(unless the Non-Displayed Order has a time-in-force of Immediate-or-
Cancel (``IOC'') \8\) and/or routed if it has been designated as a
routable order.
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\7\ See Rule 1.5(t). The term ``Protected Bid'' or ``Protected
Offer'' shall mean a bid or offer in a stock that is (i) displayed
by an automated trading center; (ii) disseminated pursuant to an
effective national market system plan; and (iii) an automated
quotation that is the best bid or best offer of a national
securities exchange or association. The term ``Protected Quotation''
shall mean a quotation that is a Protected Bid or Protected Offer.
\8\ See Exchange Rule 11.9(b)(1). An Immediate-or-Cancel
(``IOC'') Order is a limit order that is to be executed in whole or
in part as soon as such order is received. The portion not executed
immediately on the Exchange or another trading center is treated as
cancelled and is not posted to the BZX Book. IOC limit orders that
are not designated as ``BZX Only'' and that cannot be executed in
accordance with Rule 11.13(a)(4) on the System when reaching the
Exchange will be eligible for routing away pursuant to Rule
11.13(b).
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Next, the Exchange next proposes to introduce Rule 11.9(c)(11)(B),
which describes the price at which a Non-Displayed Order is posted and
ranked on the BZX Book in the event that it is not executed pursuant to
proposed Rule 11.9(c)(11)(A). Proposed Rule 11.9(c)(11)(B)(i) provides
if the limit price of a Non-Displayed Order would lock the BZX Book,
the Non-Displayed Order will be posted on the BZX Book at the locking
price and will be executed as set forth in Rule 11.13(a)(4)(C)[sic].
If, however, an inbound Non-Displayed Order cannot execute due to User
\9\ instruction (e.g., Post Only \10\ or minimum quantity) and does not
contain a price slide instruction, the Non-Displayed Order will be
cancelled. An inbound Non-Displayed Order that cannot execute upon
entry and contains a price slide instruction will be ranked at the
locking price upon entry. Proposed Rule 11.9(c)(11)(B)(ii) provides if
the limit price of the Non-Displayed Order would cross a Protected
Quotation and the Non-Displayed Order contains a price slide
instruction, the Non-Displayed Order will be executed as set forth in
Rule 11.9(g)(1) or cancel, based on User instruction. If the entered
limit price of the Non-Displayed Order would cross a Protected
Quotation and the Non-Displayed Order does not contain a price slide
instruction, the Non-Displayed Order will cancel or route, based on
User instruction. Proposed Rule 11.9(c)(11)(B)(iii) provides that in
situations where there is a resting Non-Displayed Order on the buy
(sell) side of the market and an incoming Non-Displayed Order on the
sell (buy) side of the market is unable to execute due to User
instruction (e.g., Post Only or minimum quantity) and posts to the BZX
Book at a price that locks the resting Non-Displayed Order, an incoming
Non-Displayed Order on the buy (sell) side of the market may execute
with the resting Non-Displayed Order on the sell (buy) side of the
market at the locking price ahead of the Non-Displayed Order on the buy
(sell) side of the market. The Exchange believes that it is more
appropriate to permit later-arriving orders to execute ahead of a
resting order posted to the BZX Book that is in a locked state due to
the presence of a contra-side order with specific User instructions
(e.g.,
[[Page 20762]]
Post Only or minimum quantity) rather than cancel or slide the later-
arriving order due to the information leakage that would occur as a
result of the cancellation. The Exchange has included an example to
demonstrate this operation, which is contained in proposed Rule
11.9(c)(11)(B)(iii).
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\9\ See Rule 1.5(cc). The term ``User'' shall mean any Member or
Sponsored Participant who is authorized to obtain access to the
System pursuant to Rule 11.3.
\10\ See Rule 11.9(c)(6). A Post Only Order is an order that is
to be ranked and executed on the Exchange pursuant to Rule 11.12 and
Rule 11.13(a)(4) or cancelled, as appropriate, without routing away
to another trading center except that the order will not remove
liquidity from the BZX Book, other than as described below. A BZX
Post Only Order will remove contra-side liquidity from the BZX Book
if the order is an order to buy or sell a security priced below
$1.00 or if the value of such execution when removing liquidity
equals or exceeds the value of such execution if the order instead
posted to the BZX Book and subsequently provided liquidity,
including the applicable fees charged or rebates provided.
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Example
<bullet> NBBO for security ABC is $10.00 x $10.05.
<bullet> User 1 enters a Mid-Point Peg \11\ order to buy 100 shares
of ABC at $10.03. User 1's order is posted to the BZX Book and ranked
at $10.025.
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\11\ See Rule 11.9(c)(9). A Mid-Point Peg Order is a limit order
that after entry into the System, the price of the order is
automatically adjusted by the System in response to changes in the
NBBO to be pegged to the mid-point of the NBBO, or, alternatively,
pegged to the less aggressive of the midpoint of the NBBO or one
minimum price variation inside the same side of the NBBO as the
order.
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<bullet> User 2 enters a Mid-Point Peg Post Only order to sell 100
shares of ABC at $10.02. User 2's order is posted to the BZX Book and
ranked at $10.025.
<bullet> User 3 enters an IOC Order to buy 100 shares of ABC at
$10.05.
<bullet> Result: Pursuant to proposed Rule 11.9(c)(11)(B)(iii),
User 3's order trades with User 2's Mid-Point Peg Post Only order at a
price of $10.025. In this instance, User 3's order trades with User 2's
order ahead of User 1's order because when User 2's order was
originally entered, it was unable to execute due to the Post Only
instruction. As both User 2's order and User 1's order are non-
displayed orders (Mid-Point Peg orders by nature are non-displayed),
the Exchange allows User 2's order to post to the BZX Book and be
ranked at the locking price as the non-displayed nature of these orders
would not cause a violation of Regulation NMS. The Exchange believes
that if it were instead to slide User 2's order in accordance with Rule
11.9(g)(2) or cancel User 2's order so that it would not create an
internal locked book, the act of sliding or cancelling User 2's order
would result in information leakage. As such, the Exchange believes
that it is appropriate to permit User 3's order to trade ahead of User
1's resting order at a price of $10.025.
Finally, the Exchange also proposes to amend Rule 11.13(a)(4)(C)-
(D) to better describe the execution of Non-Displayed Orders in
situations where a locked market exists on the BZX Book. Rule
11.13(a)(4)(C) currently states that certain orders are permitted to
post and rest on the BZX Book at prices that lock contra-side
liquidity, provided, however, that the System will never display a
locked market. The Exchange proposes to add language to Rule
11.13(a)(4)(C) to provide that consistent with Rule 11.12, which sets
forth the Exchange's rule regarding priority of orders, Non-Displayed
Orders and orders subject to display-price sliding as set forth in Rule
11.9(g)(1) (defined as the ``Resting Orders'') cannot be executed
pursuant to Rule 11.13 when such Resting Orders would be executed at
prices equal to displayed orders on the opposite side of the market
(the ``Locking Price'').\12\ The Exchange also proposes to amend Rule
11.13(a)(4)(D) to conform with the proposed changes in Rule
11.13(a)(4)(C) with regard to the use of the terms Resting Order and
Locking Price. Proposed Rule 11.13(a)(4)(D) will be revised from its
current text to provide that in the event that an incoming order
described in sub-paragraphs (A) and (B) is a Market Order or is a Limit
Order priced more aggressively than the Locking Price of a Resting
Order as described in sub-paragraph (C), the Exchange will execute the
Resting Order at, in the case of a Resting Order bid, one-half minimum
price variation less than the Locking Price, and, in the case of a
Resting Order offer, one-half minimum price variation more than the
Locking Price.
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\12\ Any incoming order that would execute against the Resting
Order at the Locking Price would receive a priority advantage over
the displayed order at the Locking Price. As such, the Exchange does
not execute a Resting Order against an incoming order at the Locking
Price if there is also a displayed order resting on the BZX Book at
the Locking Price.
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The proposed changes to Rule 11.9(c)(11) and Rule 11.13(a)(4)(C)-
(D) will describe the current behavior of orders containing a Non-
Displayed instruction in greater detail and align the rules of the
Exchange with its affiliate exchange, EDGX. The Exchange is not
proposing to amend its current functionality regarding Non-Displayed
Orders, but rather seeks to amend its rules so that Users and other
market participants will have greater certainty and clarity regarding
how a Non-Displayed Order is posted and ranked on the BZX Book during
certain scenarios involving locked and crossed markets.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\13\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \14\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \15\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ Id.
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The Exchange believes the proposed amendments to Rule 11.9(c)(11)
and Rule 11.13(a)(4)(C)-(D) to introduce additional rule text
describing the entry and execution of Non-Displayed Orders on the
Exchange promote just and equitable principles of trade by providing
additional certainty and clarity to market participants regarding how
the System processes Non-Displayed Orders. Specifically, the Exchange
seeks to provide additional information regarding the price at which a
Non-Displayed Order is posted and ranked on the BZX Book when a Non-
Displayed Order either locks or crosses a Protected Quotation or when a
Non-Displayed Order locks the BZX Book. Further, the Exchange is not
proposing to amend Non-Displayed Order behavior, but rather only
seeking to introduce additional language to its rules to provide
additional explanation and clarity to Users and market participants
about Non-Displayed Order behavior during a locked or crossed market
scenario. By introducing the proposed rule text, Users will have a
better understanding of how a Non-Displayed Order is posted and ranked
during certain scenarios involving locked and crossed markets, which
benefits all Users and the marketplace as a whole.
Additionally, the Exchange believes its proposal to introduce
additional rule text describing the entry and execution of Non-
Displayed Orders on the Exchange is not unfairly discriminatory as all
Users and market participants will be subject to the same application
of the Exchange's rules and will have equal access to the Exchange
rulebook. Finally, the Exchange notes that the
[[Page 20763]]
proposed text of Rule 11.9(c)(11) and Rule 11.13(a)(4)(C)-(D) has
already been approved by the Commission for the Exchange's affiliate
exchange.\16\ Indeed, the proposed amendments are substantially similar
those approved by the Commission for EDGX Exchange with differences
only to account for the Exchange's existing rule text. Thus, the
proposed amendments to Rule 11.9(c)(11) and Rule 11.13(a)(4)(C)-(D) do
not present any novel issues for the Commission's consideration.
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\16\ Supra note 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the proposed changes do not impose any burden on intramarket or
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The proposed changes to Rule
11.9(c)(11) and Rule 11.13(a)(4)(C)-(D) are not proposed for
competitive reasons but rather to provide Users with additional clarity
and transparency about what price a Non-Displayed Order is posted,
ranked, and executed during certain scenarios involving locked and
crossed markets. Nor do the proposed changes modify the functionality
or behavior of Non-Display Orders or any other order type on the
Exchange. Rather, the proposed rule changes clarify the current
functionality and behavior of Non-Displayed Orders on the Exchange. The
proposed rule changes will also align the Exchange's rule text with
that of its affiliate exchange, EDGX. Finally, all Users and market
participants will be subject to the same application of the Exchange's
rules and will have equal access to the Exchange rulebook. Thus, the
proposed rule changes add clarity and transparency to the rules of the
Exchange regarding Non-Displayed Orders and will not impose any burden
on intramarket or intermarket competition.
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
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \17\ and Rule
19b-4(f)(6) \18\ thereunder.
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\17\ 15 U.S.C. 78s(b)(3)(A)(iii).
\18\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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The Exchange has requested that the Commission waive the 30-day
operative delay contained in Rule 19b-4(f)(6)(iii) so that the proposed
rule change may become operative upon filing. The Exchange states that
the proposed rule change will align the Exchange Rules regarding
treatment of Non-Displayed Order with that of the Exchange's affiliate,
EDGX. Because the proposed rule change does not raise any novel
regulatory issues, the Commission believes that waiver of the operative
delay is consistent with the protection with the protection of
investors and the public interest. Accordingly, the Commission hereby
waives the operative delay and designates the proposal operative upon
filing.\19\
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\19\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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 will 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#d4a6a1b8b1f9b7bbb9b9b1baa0a794a7b1b7fab3bba2"><span class="__cf_email__" data-cfemail="681a1d040d450b0705050d061c1b281b0d0b460f071e">[email protected]</span></a>. Please include
file number SR-CboeBZX-2026-029 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-CboeBZX-2026-029. 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-CboeBZX-2026-029 and should be submitted
on or before May 8, 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), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07487 Filed 4-16-26; 8:45 am]
BILLING CODE 8011-01-P
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