[Federal Register Volume 86, Number 85 (Wednesday, May 5, 2021)]
[Notices]
[Pages 24072-24076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-09432]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91702; File No. SR-EMERALD-2021-15]


Self-Regulatory Organizations; MIAX Emerald, LLC; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Interpretation and Policy .13 (Temporary Extension of the Limited 
Period for Registered Persons To Function as Principals) to Exchange 
Rule 1900, Registration Requirements, To Extend the Expiration Date of 
the Temporary Amendment Set Forth in SR-EMERALD-2020-21 From April 30, 
2021 to June 30, 2021

April 29, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on April 21, 2021, MIAX Emerald, LLC (``MIAX 
Emerald'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been substantially 
prepared by the self-regulatory organization. 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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[[Page 24073]]

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Interpretation and Policy .13 
(Temporary Extension of the Limited Period for Registered Persons to 
Function as Principals) to Exchange Rule 1900, Registration 
Requirements, to extend the expiration date of the temporary amendment 
set forth in SR-EMERALD-2020-21 from April 30, 2021 to June 30, 2021. 
The Exchange does not anticipate providing any further extensions to 
the temporary amendment identified in this proposed rule change beyond 
June 30, 2021.
    The text of the proposed rule change is available on the Exchange's 
website at http://www.miaxoptions.com/rule-filings/emerald, at MIAX 
Emerald's principal office, and at the Commission's Public Reference 
Room.

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 Interpretation and Policy .13 
(Temporary Extension of the Limited Period for Registered Persons to 
Function as Principals) to Exchange Rule 1900, Registration 
Requirements, to extend the expiration date of the temporary amendment 
set forth in SR-EMERALD-2020-21 from April 30, 2021 to June 30, 2021. 
The proposed rule change would extend the 120-day period that certain 
individuals can function as principals without having successfully 
passed an appropriate qualification examination through June 30, 
2021,\3\ and would apply only to those individuals who were designated 
to function as principals prior to March 3, 2021. This proposed rule 
change is based on a filing recently submitted by the Financial 
Industry Regulatory Authority, Inc. (``FINRA'') \4\ and is intended to 
harmonize the Exchange's registration rules with those of FINRA so as 
to promote uniform standards across the securities industry.
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    \3\ See Exchange Act Release No. 91506 (April 8, 2021) 86 FR 
19671 (April 14, 2021) (SR-FINRA-2021-005) (the ``FINRA Filing''). 
The Exchange notes that the FINRA Filing also provides temporarily 
relief to individuals registered with FINRA as Operations 
Professionals under FINRA Rule 1220. The Exchange does not have a 
registration category for Operations Professionals and therefore, 
the Exchange is not proposing to adopt that aspect of the FINRA 
Filing. If the Exchange seeks to provide additional temporary relief 
from the rule requirement identified in this proposal beyond June 
30, 2021, it will submit a separate rule filing to further extend 
the temporary extension of time.
    \4\ See id.
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    In response to the COVID-19 global pandemic, last year FINRA began 
providing temporary relief by way of frequently asked questions 
(``FAQs'') \5\ to address disruptions to the administration of FINRA 
qualification examinations caused by the pandemic that have 
significantly limited the ability of individuals to sit for 
examinations due to Prometric test center capacity issues.\6\
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    \5\ See https://www.finra.org/rules-guidance/key-topics/covid-19/faq#qe.
    \6\ At the outset of the COVID-19 pandemic, all FINRA 
qualification examinations were administered at test centers 
operated by Prometric. Based on the health and welfare concerns 
resulting from COVID-19, in March 2020 Prometric closed all of its 
test centers in the United States and Canada and began to slowly 
reopen some of them at limited capacity in May. Currently, Prometric 
has resumed testing in many of its United States and Canada test 
centers, at either full or limited occupancy, based on local and 
government mandates.
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    FINRA published the first FAQ on March 20, 2020, providing that 
individuals who were designated to function as principals under FINRA 
Rule 1210.04 \7\ prior to February 2, 2020, would be given until May 
31, 2020, to pass the appropriate principal qualification 
examination.\8\ On May 19, 2020, FINRA extended the relief to pass the 
appropriate examination until June 30, 2020. On June 29, 2020, FINRA 
again extended the temporary relief providing that individuals who were 
designated to function as principals under FINRA Rule 1210.04 prior to 
May 4, 2020, would be given until August 31, 2020, to pass the 
appropriate principal qualification examination. On August 28, 2020, 
FINRA filed with the Commission a proposed rule change for immediate 
effectiveness to extend the temporary relief provided via the two FAQs 
by adopting: (1) Temporary Supplementary Material .12 (Temporary 
Extension of the Limited Period for Registered Persons to Function as 
Principals) under FINRA Rule 1210 (Registration Requirements), and (2) 
temporary Supplementary Material .07 (Temporary Extension of the 
Limited Period for Persons to Function as Operations Professionals) 
under FINRA Rule 1220 (Registration Categories).\9\ Pursuant to this 
rule filing, individuals who were designated prior to September 3, 
2020, to function as a principal under FINRA Rule 1210.04 would have 
until December 31, 2020, to pass the appropriate qualification 
examination.
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    \7\ Exchange Rule 1900, Interpretation and Policy .04, is the 
corresponding rule to FINRA Rule 1210.04.
    \8\ FINRA Rule 1210.04 (Requirements for Registered Persons 
Functioning as Principals for a Limited Period) allows a FINRA-
member firm to designate certain individuals to function in a 
principal capacity for 120 calendar days before having to pass an 
appropriate principal qualification examination. Exchange Rule 1900, 
Interpretation and Policy .04, provides the same allowance to 
Exchange Members.
    \9\ See Exchange Act Release No. 89732 (September 1, 2020), 85 
FR 55535 (September 8, 2020) (Notice of Filing and Immediate 
Effectiveness of File No. SR-FINRA-2020-026).
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    Thereafter, on December 9, 2020, FINRA filed with the Commission a 
proposed rule change for immediate effectiveness to extend the limited 
period for registered persons to function as a principal through April 
30, 2021.\10\ Pursuant to this rule filing, individuals who were 
designated prior to January 1, 2021 to function as a principal would 
have until April 30, 2021 to pass the appropriate qualifying 
examination. On December 28, 2020, the Exchange filed with the 
Commission a proposed rule change for immediate effectiveness to extend 
the limited period for registered persons to function as a principal 
through April 30, 2021.\11\
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    \10\ See Exchange Act Release No. 90617 (December 9, 2020), 85 
FR 81258 (December 15, 2020) (SR-FINRA-2020-043).
    \11\ See Exchange Act Release No. 90829 (December 28, 2020), 86 
FR 636 (December 30, 2020) (SR-EMERALD-2020-21).
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    The Exchange continues to closely monitor the impact of the COVID-
19 pandemic on Members,\12\ investors, and other stakeholders. The 
Exchange initially provided temporary relief to address the 
interruptions in the administration of FINRA qualification examinations 
at Prometric test centers and the limited ability of individuals to sit 
for the examinations caused by the COVID-19 pandemic.\13\ As mentioned 
in the FINRA Filing (SR-FINRA-2021-005), FINRA noted that the pandemic 
could result in firms potentially

[[Page 24074]]

experiencing significant disruptions to their normal business 
operations that may be exacerbated by being unable to keep principal 
positions filled. Specifically, FINRA noted that the limitation of in-
person activities and staff absenteeism as a result of the health and 
welfare concerns stemming from COVID-19 could result in firms having 
difficulty finding other qualified individuals to transition into those 
roles or requiring them to reallocate employee time and resources away 
from other critical responsibilities at the firm's organization.
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    \12\ The term ``Member'' means an individual or organization 
approved to exercise the trading rights associated with a Trading 
Permit. Members are deemed ``members'' under the Exchange Act. See 
Exchange Rule 100.
    \13\ Information about the continued impact of COVID-19 on 
FINRA-administered examinations is available at https://www.finra.org/rules-guidance/key-topics/covid-19/exams.
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    While there are signs of improvement, the COVID-19 conditions 
necessitating the temporary relief persist and the Exchange has 
determined that there is a continued need for this temporary relief 
beyond April 30, 2021. Although Prometric has resumed testing in many 
of its U.S. test centers, Prometric's safety practices mean that 
currently not all test centers are open, some of the open test centers 
are at limited capacity, and some open test centers are delivering only 
certain examinations that have been deemed essential by the local 
government.\14\ In addition, while certain states have started to ease 
COVID-19 restrictions on businesses and social activities, public 
health officials continue to emphasize the importance for individuals 
to keep taking numerous steps to protect themselves and help slow the 
spread of the disease.\15\
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    \14\ Information from Prometric about its safety practices and 
the impact of COVID-19 on its operations is available at https://www.prometric.com/corona-virusupdate. See also supra note 13.
    \15\ See, e.g., Centers for Disease Control and Prevention, How 
to Protect Yourself & Others, https://www.cdc.gov/coronavirus/2019-ncov/prevent-gettingsick/prevention.html.
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    Although the COVID-19 conditions necessitating the temporary relief 
persist, the Exchange believes that an extension of the relief is 
necessary only until June 30, 2021, because FINRA recently expanded the 
availability of online examinations. Prior to this expansion, the 
ongoing effects of the pandemic made it impracticable for Members to 
ensure that the individuals who they had designated to function in a 
principal capacity, as set forth in Exchange Rule 1900, Interpretation 
and Policy .04, could successfully sit for and pass an appropriate 
qualification examination within the 120-calendar day period required 
under the rules.\16\ Specifically, if the individual wanted to take a 
qualifying examination, they were required to accept the health risks 
associated with taking an in-person examination because those 
examinations were not available online. On February 24, 2021, however, 
FINRA adopted an interim accommodation request process to allow 
candidates to take additional FINRA examinations online, including the 
General Securities Principal (``Series 24'') and Operations 
Professional (``Series 99'') examinations.\17\ Because the Series 24 
qualifying examination has been made available online only recently, 
the Exchange is concerned that individuals who have been designated to 
function in a principal capacity may not have sufficient time to 
schedule, study for, and take the applicable examination before April 
30, 2021, the date the temporary amendment is set to expire. Therefore, 
the Exchange proposes to extend the expiration date of the temporary 
amendment set forth in Exchange Rule 1900, Interpretation and Policy 
.13, from April 30, 2021 until June 30, 2021. The proposed rule change 
would apply only to those individuals who have been designated to 
function as a principal prior to March 3, 2021. As noted above, the 
Exchange does not anticipate providing any further extensions to the 
temporary amendment and any individuals designated to function as a 
principal on or after March 3, 2021, will need to successfully pass an 
appropriate qualification examination within 120 days.
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    \16\ See supra note 13.
    \17\ Id.
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    The Exchange believes that this proposed continued extension of 
time is tailored to address the needs and constraints on a Member's 
operations during the COVID-19 pandemic, without significantly 
compromising critical investor protection. The proposed extension of 
time will help to minimize the impact of COVID-19 on Members by 
providing continued flexibility so that Members can ensure that 
principal positions remain filled. The potential risks from the 
proposed extension of the 120-day period are mitigated by a Member's 
continued requirement to supervise the activities of these designated 
individuals and ensure compliance with federal securities laws and 
regulations, as well as Exchange and FINRA rules.
    The Exchange has filed the proposed rule change for immediate 
effectiveness and has requested that the Commission waive the 
requirement that the proposed rule change not become operative for 30 
days after the date of the filing, so the Exchange can implement the 
proposed rule change immediately.
2. Statutory Basis
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b) of the Act \18\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \19\ in particular, in that it 
is 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 facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanisms of a free and open market and a national market system and, 
in general, to protect investors and the public interest.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change is intended to minimize the impact of 
COVID-19 on Member operations by further extending the 120-day period 
certain individuals may function as a principal without having 
successfully passed an appropriate qualification examination under 
Exchange Rule 1900, Interpretation and Policy .04, until June 30, 2021. 
The proposed rule change does not relieve Members from maintaining, 
under the circumstances, a reasonably designed system to supervise the 
activities of their associated persons to achieve compliance with 
applicable securities laws and regulations, and with applicable 
Exchange and FINRA rules that directly serve investor protection. In a 
time when faced with unique challenges resulting from the COVID-19 
pandemic, the Exchange believes that the proposed rule change is a 
sensible accommodation that will continue to afford Members the ability 
to ensure that critical positions are filled and client services 
maintained, while continuing to serve and promote the protection of 
investors and the public interest in this unique environment.

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. The proposed rule change is 
intended to provide temporary relief given the impacts of the COVID-19 
pandemic crisis and to also maintain consistency with the rules of 
other self-regulatory organizations (``SROs'') with respect to the 
registration requirements applicable to Members and their registered 
personnel. In that regard, the Exchange believes that any burden on 
competition would be clearly outweighed by providing Members with 
temporary

[[Page 24075]]

relief in this unique environment while also ensuring clear and 
consistent requirements applicable across SROs and mitigating any risk 
of SROs implementing different standards in these important areas. In 
its filings, FINRA provides an abbreviated economic impact assessment 
maintaining that the changes are necessary to temporarily rebalance the 
attendant benefits and costs of the obligations under FINRA Rule 1210 
in response to the impacts of the COVID-19 pandemic that is equally 
applicable to the changes the Exchange proposes.\20\ The Exchange 
accordingly incorporates FINRA's abbreviated economic impact assessment 
by reference.
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    \20\ See supra notes 3 and 10; see also Exchange Act Release No. 
89732 (September 1, 2020), 85 FR 55535 (September 8, 2020) (SR-
FINRA-2020-26).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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) of the Act \21\ and Rule 19b-
4(f)(6) thereunder.\22\
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of 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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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing. However, 
pursuant to Rule 19b-4(f)(6)(iii), the Commission may designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The Exchange has asked the 
Commission to waive the 30-day operative delay so that the proposed 
rule change may become operative immediately upon filing. As noted 
above, the Exchange stated that the conditions necessitating the 
temporary relief continue to exist and the proposed extension of time 
will help minimize the impact of the COVID-19 outbreak on Members' 
operations by allowing them to keep principal positions filled and 
minimizing disruptions to client services and other critical 
responsibilities. Despite signs of improvement, the Exchange further 
stated that the ongoing extenuating circumstances of the COVID-19 
pandemic make it impractical to ensure that individuals designated to 
act in a principal capacity are able to take and pass the appropriate 
qualification examination during the 120-calendar day period required 
under the rules.
    The Exchange observed that, following a nationwide closure of all 
test centers earlier in the year, some test centers have re-opened, but 
are operating at limited capacity or are only delivering certain 
examinations that have been deemed essential by the local 
government.\23\ However, on February 24, 2021, FINRA began providing 
the General Securities Principal (Series 24) Examination online through 
an interim accommodation request process.\24\ Prior to this change, if 
individuals wanted to take these qualifying examinations, they were 
required to accept the health risks associated with taking an in-person 
examination. Even with the expansion of online qualifications 
examinations, the Exchange stated that extending the expiration date of 
the relief set forth in SR-EMERALD-2020-21 until June 30, 2021 is still 
needed. The Exchange stated that this temporary relief will provide 
flexibility to allow individuals who have been designated to function 
as a principal sufficient time to schedule, study for and take the 
applicable examination before the temporary relief expires. Notably, 
the Exchange stated that it does not anticipate providing any further 
extensions to the temporary amendment and that any individuals 
designated to function as a principal on or after March 3, 2021 will 
need to successfully pass an appropriate qualification examination 
within 120 days.
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    \23\ See supra notes 13 and 14. The Exchange notes that 
Prometric has also had to close some reopened test centers due to 
incidents of COVID-19 cases.
    \24\ See supra note 13 (including the February 24, 2021 
announcement of the interim accommodation process for candidates to 
take certain examinations, including the General Securities 
Principal (Series 24) Examination, online.)
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    For these reasons, the Commission believes that waiver of the 30-
day operative delay is consistent with the protection of investors and 
the public interest.\25\ Accordingly, the Commission hereby waives the 
30-day operative delay and designates the proposal operative upon 
filing.\26\
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    \25\ As noted above by the Exchange, this proposal is an 
extension of temporary relief provided in SR-EMERALD-2020-21 where 
the Exchange also requested and the Commission granted a waiver of 
the 30-day operative delay. See SR-EMERALD-2020-21, 86 FR at 639.
    \26\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule change'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 shall institute proceedings to 
determine whether the proposed rule 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

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR- EMERALD-2021-15 on the subject line.

Paper Comments

     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-EMERALD-2021-15. 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 (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official

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business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
such filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
EMERALD-2021-15 and should be submitted on or before May 26, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-09432 Filed 5-4-21; 8:45 am]
BILLING CODE 8011-01-P


