Notice2026-12032
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule Related To Lead Market Maker Rebates
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 16, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 115 (Tuesday, June 16, 2026)</title>
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[Federal Register Volume 91, Number 115 (Tuesday, June 16, 2026)]
[Notices]
[Pages 36181-36185]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-12032]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105667; File No. SR-CboeBZX-2026-051]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Its Fee Schedule Related To Lead Market Maker Rebates
June 11, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 29, 2026, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
filed with the Securities and Exchange Commission (``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
Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (``Commission'' or ``SEC'')
a proposed rule change to amend its fee schedule applicable to its
equities trading platform (``BZX Equities'') to modify the liquidity
provision incentive structure applicable to the Exchange's lead market
maker (``LMM'') program in BZX-listed exchange-traded product (``ETP'')
securities as provided in footnote 14(B) of the fee schedule. The 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.
[[Page 36182]]
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 its Fee Schedule applicable to BZX
Equities to modify the liquidity provision incentive structure
applicable to the Exchange's LMM program in BZX-listed ETP securities
as provided in footnote 14(B) of the fee schedule. Specifically, the
Exchange proposes to introduce three new incentive tiers to replace the
existing provisions of footnote 14(B)(i) and (ii), effective July 1,
2026.\3\ The three new incentive tiers are as follows: (1) a volume-
based tier pricing structure providing per-share or per-symbol rebates
based on the consolidated average daily volume (``CADV'') \4\ of each
individual ETP LMM Security,\5\ to be set forth in new footnote
14(B)(6)(i); (2) incremental add rebates for Tape B \6\ displayed
liquidity based on the percentage of total BZX-listed symbols for which
a Member serves as ETP LMM, to be set forth in new footnote
14(B)(6)(ii); and (3) a low CADV tier stipend for ETP LMMs that
maintain a minimum percentage of assignments in lower-volume
securities, to be set forth in new footnote 14(B)(6)(iii). The Exchange
proposes to adopt these changes to the Fee Schedule effective June 1,
2026. Although the new ETP LMM payout structure will be formally
implemented on July 1, 2026, the Exchange is filing these proposed
changes and making them effective June 1, 2026 so that Members have
advance notice of the new pricing structure prior to its operative
date. This advance notice is particularly important given that
eligibility for payouts is based, in part, on volume transacted during
the prior calendar month (e.g., volume transacted in June will
determine payouts effective in July). The Exchange is also adding text
to the Fee Schedule to clearly label the provisions applicable through
June 30, 2026 and those applicable on and after July 1, 2026.
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\3\ The Exchange will propose under a separate filing to remove
the existing provisions of footnote 14(B)(i) and (ii) for
effectiveness July 1, 2026.
\4\ ``CADV'' means consolidated average daily volume calculated
as the average daily volume reported for a security by all exchanges
and trade reporting facilities to a consolidated transaction
reporting plan for the three calendar months preceding the month for
which the fees apply and excludes volume on days when the market
closes early and on the Russell Reconstitution Day.
\5\ ``ETP LMM Security'' refers to the BZX-listed securities for
which the Member is the ETP LMM.
\6\ Fee code ``B'' refers to displayed orders that add liquidity
to BZX (Tape B).
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The Exchange first notes that its listings business operates in a
highly competitive market in which market participants, including
issuers of securities, LMMs, and other liquidity providers, can readily
transfer their listings, opt not to participate, or direct order flow
to competing venues if they deem fee levels, liquidity provision
incentive programs, or any other factor at a particular venue to be
insufficient or excessive. The proposed rule changes reflect a
competitive pricing structure designed to incentivize market
participants to participate as LMMs in the Exchange's LMM Program,
which the Exchange believes will enhance market quality in all
securities listed on the Exchange and encourage issuers to list new
products and transfer existing products to the Exchange.
Background
The ETP LMM Program was adopted in 2019 and was designed to
encourage LMMs to maintain better market quality in BZX-listed
securities, and in particular, in lower volume securities where
transaction-based compensation (i.e., rebates) may not be sufficient to
incentivize meaningful liquidity provision. Most recently, the Exchange
amended the Base and Enhanced Minimum Performance Standards applicable
to the ETP LMM Program and memorialized those standards in the fee
schedule.\7\
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\7\ See Securities Exchange Act No. 104472 (December 19, 2025)
90 FR 60832 (December 29, 2025) (SR-CboeBZX-2025-163).
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Currently, footnote 14(B) of the fee schedule provides daily
incentives for ETP LMMs that meet the Base or Enhanced Minimum
Performance Standards. Such daily incentives are determined based on
two variables: (1) the aggregate average daily auction volume across
all BZX-listed securities for which the Member is the ETP LMM (``ETP
LMM Securities''); and (2) the total number of securities for which the
Member qualifies as a Qualified ETP LMM. Generally speaking, the more
ETP LMM Securities for which the LMM meets the Minimum Performance
Standards and the higher the aggregate auction volume across those
securities, the greater the total daily incentive to the LMM.
While the Exchange believes the current program has been effective
in incentivizing market quality, the Exchange has identified certain
limitations with the existing structure. In particular, the current
program aggregates auction volume across all of a Member's ETP LMM
Securities to determine the applicable incentive rate, which means the
same rate applies uniformly to all of a Member's qualifying securities
regardless of the individual volume characteristics of each security.
The Exchange believes this structure does not sufficiently
differentiate incentives at the individual security level and may not
optimally encourage LMMs to maintain strong market quality in
securities across the full spectrum of CADV levels. The Exchange
therefore proposes to adopt the tiered incentive structure described
below.
Proposal
New Footnote 14(B)(6)(i)--Volume-Based Tier Pricing
The Exchange proposes to adopt a volume-based tier pricing
structure under new footnote 14(B)(6)(i). Under the proposed structure,
an ETP LMM that meets the ``Base'' or ``Enhanced'' Minimum Performance
Standards \8\ for an ETP LMM Security for at least 75% of the trading
days that the LMM was assigned the ETP LMM Security during the month
will be eligible for a per-share or per-symbol rebate determined by
reference to the CADV of each individual ETP LMM Security during the
previous month.
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\8\ The Base and Enhanced Minimum Performance Standards are set
forth in footnote 14(B)(1)-(6) of the fee schedule.
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For higher-volume securities, the rebate is calculated on a per-
share basis. Specifically, ETP LMM Securities with a CADV greater than
1,000,000 shares will receive a Base Rate of $0.0034 per share and an
Enhanced Rate of $0.0036 per share. Securities with a CADV between
500,001 and 1,000,000 shares will receive a Base Rate of $0.0040 per
share and an Enhanced Rate of $0.0042 per share. Securities with a CADV
between 250,001 and 500,000 shares will receive a Base Rate of $0.0041
per share and an Enhanced Rate of $0.0043 per share. Securities with a
CADV between 100,001 and 250,000 shares will receive a Base Rate of
$0.0045 per
[[Page 36183]]
share and an Enhanced Rate of $0.0047 per share.
For lower-volume securities, the rebate is calculated on a per-
symbol basis. ETP LMM Securities with a CADV between 50,001 and 100,000
shares will receive a Base Rate of $400 per symbol and an Enhanced Rate
of $650 per symbol. Securities with a CADV between 25,001 and 50,000
shares will receive a Base Rate of $425 per symbol and an Enhanced Rate
of $675 per symbol. Securities with a CADV of 25,000 shares or fewer
will receive a Base Rate of $450 per symbol and an Enhanced Rate of
$700 per symbol. For newly listed symbols in their first month of
trading, the ETP LMM will be eligible for the Base Rate stipend of $450
per symbol, pro-rated based on the number of days the security traded
during that month.
Unlike the current structure, which applies a uniform daily
incentive rate based on aggregate volume across all of a Member's ETP
LMM Securities, the proposed structure evaluates each ETP LMM Security
individually based on its own CADV. The Exchange believes this approach
more directly ties the incentive to the volume and liquidity
characteristics of each security, thereby creating stronger, more
targeted incentives for LMMs to maintain market quality across
securities of varying volume levels.
Incremental Add Rebates
The Exchange also proposes to adopt incremental add rebates under
new footnote 14(B)(ii). Under the proposed structure, an ETP LMM that
meets the Base or Enhanced Minimum Performance Standards for each ETP
LMM Security for at least 75% of the trading days will be eligible for
additional Tape B displayed add rebates. For purposes of this
calculation, symbols that are assigned to the ETP LMM for only part of
the month and symbols that are listed on BZX for only part of the month
are each counted in fractional amounts, prorated based on the number of
trading days during which the assignment or listing was in effect
relative to the total number of trading days in that month.
Specifically, a Member with LMM assignments representing at least
10% of total BZX-listed symbols will receive an additional add rebate
of $0.0006 per share. A Member with assignments representing at least
7.5% will receive an additional add rebate of $0.0005 per share. A
Member with assignments representing at least 5.0% will receive an
additional add rebate of $0.0004 per share. A Member with assignments
representing at least 2.5% will receive an additional add rebate of
$0.0003 per share.
The Exchange believes the incremental add rebates are designed to
incentivize LMMs to take on and maintain a meaningful number of
assignments relative to the total BZX listings universe. By tying
additional rebates to the breadth of a Member's LMM participation, the
Exchange believes this component encourages LMMs to support market
quality across a broad range of BZX-listed securities, which benefits
issuers, investors, and the overall market ecosystem.
Low CADV Tier
Finally, the Exchange proposes to adopt a Low CADV Tier stipend
under new footnote 14(B)(iii). For each ETP LMM Security with a CADV of
1,000,000 shares or fewer per month (``Low CADV ETP Securities''), an
ETP LMM will be eligible for a monthly stipend of $200 per ETP LMM
Security, subject to the following criteria: (1) the ETP LMM is a
registered LMM for at least 15% of the total Low CADV ETP Securities
listed on the Exchange; and (2) the ETP LMM has met the Base or
Enhanced Minimum Performance Standards in the previous month for at
least 75% of its assigned Low CADV ETP Securities.
The Exchange believes the Low CADV Tier addresses a recognized
challenge in the ETP listing ecosystem: the difficulty of attracting
and retaining high-quality LMMs in lower-volume securities where
transaction-based compensation is limited. By providing an additional
per-symbol monthly stipend for LMMs that maintain a meaningful presence
across lower-volume securities and consistently meet performance
obligations in those securities, the Exchange believes this component
directly supports market quality and issuer confidence in segments of
the market where such incentives are most needed.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\9\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \10\ 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) \11\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \12\
as 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.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
\12\ 15 U.S.C. 78f(b)(4).
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The Exchange believes the proposed changes to the ETP LMM incentive
structure represent an equitable allocation of reasonable fees and
rebates among Members that choose to participate as LMMs in the
Exchange's LMM Program. The proposed tiered incentive structure under
new footnote 14(B)(6)(i) ties per-share and per-symbol rebates to the
individual CADV of each ETP LMM Security, rather than applying a
uniform rate based on aggregate volume across a Member's entire book of
assignments. The Exchange believes this approach equitably allocates
incentives based on the actual liquidity characteristics and volume
levels of each security, creating more targeted and proportional
compensation for the liquidity provision obligations undertaken by each
LMM. The incentive rates applicable under new footnote 14(B)(6)(i) are
reasonable in that they are designed to compensate LMMs for the costs
and obligations associated with maintaining market quality in
securities across a broad spectrum of volume levels, including lower-
volume securities where transaction-based compensation alone may be
insufficient to incentivize meaningful liquidity provision.
The incremental add rebates proposed under new footnote
14(B)(6)(ii) are also equitable and reasonable. These rebates are
available to any Member that meets the applicable performance standards
and maintains a sufficient breadth of LMM assignments as a percentage
of total BZX-listed symbols. The tiered structure rewards Members that
take on a broader share of the listings universe, which the Exchange
believes equitably allocates additional compensation based on the
relative scale of a Member's contribution to market quality across
[[Page 36184]]
BZX-listed securities. Any Member that satisfies the applicable
threshold is eligible to receive the corresponding rebate, and the
structure does not favor any particular Member or class of Members
beyond what is justified by the scope of their LMM participation.
The Low CADV Tier stipend under new footnote 14(B)(6)(iii) is
similarly equitable and reasonable. By providing an additional monthly
per-symbol stipend for LMMs that maintain a minimum presence in lower-
volume securities and meet applicable performance standards, the
Exchange is targeting additional compensation to the segment of the
listings universe where incentivizing liquidity provision is most
challenging and most needed. The Exchange believes this stipend is a
reasonable means of supporting market quality in low-volume securities
and is equitably structured in that it is available to any ETP LMM that
meets the eligibility criteria.
The Exchange believes the proposed changes are not unfairly
discriminatory. The proposed incentive structure is available to all
Members that choose to participate as ETP LMMs in the Exchange's LMM
Program and is applied uniformly based on objective, transparent
criteria, including the CADV of individual ETP LMM Securities, the
breadth of a Member's LMM assignments as a percentage of total BZX-
listed symbols, and satisfaction of applicable Minimum Performance
Standards. Any differential treatment among Members or securities
reflects meaningful differences in the nature and scope of their LMM
obligations and is therefore not unfairly discriminatory. The Exchange
notes that participation in the ETP LMM Program is voluntary, and
Members may choose whether to seek LMM assignments and how many
assignments to maintain.
The Exchange also notes that it operates in a highly competitive
market for listings and liquidity provision services. The proposed
changes are designed to make the Exchange's LMM Program more
competitive and more effective at attracting and retaining high-quality
LMMs across the full spectrum of BZX-listed securities. The Exchange
believes the proposed structure is responsive to the competitive
dynamics of the listings market and reflects reasonable judgments about
how to appropriately incentivize liquidity provision in securities of
varying volume characteristics.
The Exchange does not believe the proposed rule change will impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. As noted above, the Exchange
operates in a highly competitive market in which issuers, LMMs, and
other market participants may readily transfer listings or direct
participation to competing venues. The proposed changes are intended to
enhance the Exchange's competitive position by offering a more
effective and targeted LMM incentive structure. To the extent the
proposed rule change has any effect on competition, the Exchange
believes any such effect is necessary and appropriate in furtherance of
the purposes of the Act, as it is designed to improve market quality,
support issuers, and promote the maintenance of fair and orderly
markets in BZX-listed ETP securities.
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. On the contrary, the
Exchange believes the proposed rule change is designed to enhance
competition in several respects.
The Exchange first notes that it operates in a highly competitive
market for listings and liquidity provision services. Issuers of ETP
securities may list their products on any number of national securities
exchanges or other trading venues, and LMMs and other market
participants may choose to direct their participation and order flow to
whichever venue they determine offers the most attractive combination
of fees, incentives, and market quality. In this environment, the
Exchange must continually evaluate and, where appropriate, update its
fee structures and incentive programs to remain competitive. The
proposed changes to the ETP LMM incentive structure reflect this
competitive dynamic and are designed to offer a more effective and
attractive program for LMM participation in BZX-listed ETP securities.
The Exchange does not believe the proposed rule change will impose
any burden on intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
incentive structure is available to all Members that choose to
participate as ETP LMMs and is applied uniformly based on objective,
transparent criteria. Any differences in the incentives received by
individual Members will reflect differences in the volume
characteristics of their assigned securities, the breadth of their LMM
assignments, and their satisfaction of applicable Minimum Performance
Standards--all of which are factors within each Member's control and
directly tied to the scope and quality of their liquidity provision
obligations. The Exchange does not believe this differential treatment
imposes any burden on intramarket competition that is not necessary or
appropriate, as it is designed to reward Members that take on greater
liquidity provision responsibilities and maintain strong market quality
across BZX-listed securities.
The Exchange does not believe the proposed rule change will impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
changes are designed to strengthen the Exchange's LMM Program and
improve the Exchange's competitive position in the market for ETP
listings and liquidity provision. Other exchanges and trading venues
are free to adopt their own incentive programs and fee structures in
response to competitive pressures, and the Exchange's proposed changes
do not restrict the ability of other venues to compete for listings,
LMM participation, or order flow. Rather, the Exchange believes the
proposed changes will enhance intermarket competition by offering
issuers, LMMs, and other market participants a more targeted and
effective incentive program as an alternative to those offered by
competing venues.
To the extent the proposed changes are successful in attracting
additional LMM participation or encouraging existing LMMs to maintain a
broader and higher-quality presence across BZX-listed securities, the
Exchange believes the resulting improvements in market quality will
benefit issuers, investors, and the national market system as a whole.
The Exchange therefore believes that any effect the proposed changes
may have on competition is not only necessary and appropriate, but
affirmatively promotes the purposes of the Act.
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) of the Act \13\ and paragraph (f) of Rule
[[Page 36185]]
19b-4 \14\ 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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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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#97e5e2fbf2baf4f8fafaf2f9e3e4d7e4f2f4b9f0f8e1"><span class="__cf_email__" data-cfemail="cdbfb8a1a8e0aea2a0a0a8a3b9be8dbea8aee3aaa2bb">[email protected]</span></a>. Please include
file number SR-CboeBZX-2026-051 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-2026-051. 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-2026-051 and should be submitted
on or before July 7, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2026-12032 Filed 6-15-26; 8:45 am]
BILLING CODE 8011-01-P
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