[Federal Register Volume 86, Number 232 (Tuesday, December 7, 2021)]
[Notices]
[Pages 69313-69316]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26444]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93686; File No. SR-NYSEArca-2021-100]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 6.4-O 
To Allow Monday and Wednesday Expirations for Options Listed Pursuant 
to the Short Term Option Series Program on the iShares Russell 2000 ETF 
(``IWM'')

December 1, 2021.
    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 November 22, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') 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

    The Exchange proposes to amend Rule 6.4-O (Series of Options Open 
for Trading) to permit Monday and Wednesday expirations for options 
listed pursuant to the Short Term Option Series Program on the iShares 
Russell 2000 ETF. The proposed rule change is available on the 
Exchange's website at www.nyse.com, at the principal office of the 
Exchange, 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 self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 6.4-O (Series of Options Open 
for Trading) to permit Monday and Wednesday expirations for options 
listed pursuant to the Short Term Option Series Program (the ``STOS 
Program'') on the iShares Russell 2000 ETF (``IWM''). This is a 
competitive filing that is based on a proposal recently submitted by 
Nasdaq Phlx LLC (``Phlx'') and approved by the Securities and Exchange 
Commission (``Commission'').\5\
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    \5\ See Securities Exchange Act Release No. 93157 (September 28, 
2021), 86 FR 54749 (October 4, 2021) (SR-PHLX-2021-43) (order 
approving Phlx rule change).
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    A Short Term Option Series is a series in an option class that is 
approved for listing and trading on the Exchange in which the series is 
opened for trading on any Monday, Tuesday, Wednesday, Thursday or 
Friday that is a business day and that expires on the Monday, Wednesday 
or Friday of the next business week, or, in the case of a series that 
is listed on a Friday and expires on a Monday, is listed one business 
week and one business day prior to that expiration.\6\
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    \6\ The term ``Short Term Option Series'' is a series in an 
option class that is approved for listing and trading on the 
Exchange in which the series is opened for trading on any Monday, 
Tuesday, Wednesday, Thursday or Friday that is a business day and 
that expires on the Monday, Wednesday or Friday of the next business 
week, or, in the case of a series that is listed on a Friday and 
expires on a Monday, is listed one business week and one business 
day prior to that expiration. If a Tuesday, Wednesday, Thursday or 
Friday is not a business day, the series may be opened (or shall 
expire) on the first business day immediately prior to that Tuesday, 
Wednesday, Thursday or Friday, respectively. For a series listed 
pursuant to this section for Monday expiration, if a Monday is not a 
business day, the series shall expire on the first business day 
immediately following that Monday. See Rule 6.1-O(b)(41).
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    The Exchange is proposing to amend Commentary .07 to Rule 6.4-O to 
permit the listing of options series that expire on Mondays and 
Wednesdays in IWM.
Monday Expirations
    As proposed, with respect to Monday IWM Expirations within 
Commentary .07(g) to Rule 6.4-O, the Exchange may open for trading on 
any Friday or Monday that is a business day series of options on IWM to 
expire on any Monday of the month that is a business day and is not a 
Monday in which Quarterly Options Series on the same class expire 
(``Monday IWM Expirations''), provided that Monday IWM Expirations that 
are listed on a Friday must be listed at least one business week and 
one business day prior to the expiration. The Exchange may list up to 
five consecutive Monday IWM Expirations at one time; the Exchange may 
have no more than a total of five Monday IWM Expirations.
Wednesday Expirations
    As proposed, with respect to Wednesday IWM Expirations within 
Commentary .07(g) to Rule 6.4-O, the Exchange may open for trading on 
any Tuesday or Wednesday that is a business day series of options on 
IWM to expire on any Wednesday of the month that is a business day and 
is not a Wednesday in which Quarterly Options Series on the same class 
expire (``Wednesday IWM Expirations''). The Exchange may list up to 
five consecutive Wednesday IWM Expirations at one time; the Exchange

[[Page 69314]]

may have no more than a total of five Wednesday IWM Expirations.
Monday and Wednesday Expirations
    The interval between strike prices for the proposed Monday and 
Wednesday IWM Expirations will be the same as those for the current 
Short Term Option Series for Wednesday and Friday expirations 
applicable to the STOS Program.\7\ Specifically, the Monday and 
Wednesday IWM Expirations will have a $0.50 strike interval minimum.\8\ 
As is the case with other equity options series listed pursuant to the 
STOS Program, the Monday and Wednesday IWM Expirations series will be 
P.M.-settled.
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    \7\ See Commentary .07(e) to Rule 6.4-O.
    \8\ Id.
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    Pursuant to Rule 6.1-O(b)(41), with respect to the STOS Program, if 
Monday is not a business day the series shall expire on the first 
business day immediately following that Monday. This procedure differs 
from the expiration date of Wednesday expiration series that are 
scheduled to expire on a holiday. Pursuant to Rule 6.1-O(b)(41), a 
Wednesday expiration series shall expire on the first business day 
immediately prior to that Wednesday, e.g., Tuesday of that week, if the 
Wednesday is not a business day. For purposes of IWM, the Exchange 
believes that it is preferable to require Monday expiration series in 
this scenario to expire on the Tuesday of that week rather than the 
previous business day, e.g., the previous Friday, since the Tuesday is 
closer in time to the scheduled expiration date of the series than the 
previous Friday, and therefore may be more representative of 
anticipated market conditions. Monday SPY and QQQ expirations are 
treated in this manner today.\9\ Cboe Exchange, Inc. (``Cboe'') uses 
the same procedure for options on the S&P 500 index (``SPX''), Mini-SPX 
Index Options (``XSP''), Russell 2000 Index (``RUT'') and Mini-Russell 
2000 Index Options (``MRUT'') and with Monday expirations that are 
listed pursuant to its Nonstandard Expirations Pilot Program and that 
are scheduled to expire on a holiday.\10\ Also Nasdaq Phlx \11\ and 
Nasdaq ISE, LLC (``ISE'') \12\ also use the same procedure for options 
on the Nasdaq-100[supreg] (``NDX'') with Monday expirations that are 
listed pursuant to its Nonstandard Expirations Pilot Programs, 
respectively.
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    \9\ See Commentary .07 to Rule 6.4-O.
    \10\ See Cboe Rule 4.13(e)(1).
    \11\ See Phlx Options 4A, Section 12(b)(5).
    \12\ See ISE Supplementary Material .07 to Options 4A, Section 
12.
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    Currently, for each option class eligible for participation in the 
STOS Program, the Exchange is limited to opening thirty (30) series for 
each expiration date for the specific class.\13\ The thirty (30) series 
restriction does not include series that are open by other securities 
exchanges under their respective short term options rules; the Exchange 
may list these additional series that are listed by other 
exchanges.\14\ This thirty (30) series restriction would apply to 
Monday and Wednesday IWM Expiration series as well. In addition, the 
Exchange will be able to list series that are listed by other 
exchanges, assuming they file similar rules with the Commission to list 
IWM options expiring on Mondays and Wednesdays.
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    \13\ See Commentary .07(c) to Rule 6.4-O.
    \14\ See Rule 6.4A-O(b)(vi).
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    Finally, the Exchange is amending Commentary .07(a) to Rule 6.4-O, 
which addresses the listing of Short Term Option Series that expire in 
the same week as monthly or quarterly options series.\15\ Currently, 
that rule states that no Short Term Option Series may expire in the 
same week in which monthly option series on the same class expire (with 
the exception of Monday and Wednesday SPY and QQQ Expirations) or, in 
the case of Quarterly Options Series, on an expiration that coincides 
with an expiration of Quarterly Options Series on the same class.\16\ 
As with Monday and Wednesday SPY and QQQ Expirations, the Exchange is 
proposing to permit Monday and Wednesday IWM Expirations to expire in 
the same week as monthly options series on the same class. The Exchange 
believes that it is reasonable to extend this exemption to Monday and 
Wednesday IWM Expirations because Monday and Wednesday IWM Expirations 
and standard monthly options will not expire on the same trading day, 
as standard monthly options expire on Fridays. Additionally, the 
Exchange believes that not listing Monday and Wednesday IWM Expirations 
for one week every month because there was a monthly IWM expiration on 
the Friday of that week would create investor confusion.
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    \15\ The Exchange also proposes to make a conforming change to 
Commentary .07(a) to Rule 6.4-O to include reference to Rule 6.4-
O(g) (as modified) to include reference to Monday and Wednesday IWM 
Expirations. See proposed Commentary .07(a) to Rule 6.4-O.
    \16\ See Commentary .07(g) to Rule 6.4-O.
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    The Exchange does not believe that any market disruptions will be 
encountered with the introduction of P.M.-settled Monday and Wednesday 
IWM Expirations. The Exchange has the necessary capacity and 
surveillance programs in place to support and properly monitor trading 
in the proposed Monday and Wednesday IWM Expirations. The Exchange 
currently trades P.M.-settled Short Term Option Series that expire 
Monday and Wednesday for SPY and QQQ and has not experienced any market 
disruptions nor issues with capacity. The Exchange currently has 
surveillance programs in place to support and properly monitor trading 
in Short Term Option Series that expire Monday and Wednesday for SPY 
and QQQ.
    Similar to SPY and QQQ, the introduction of Monday and Wednesday 
IWM Expirations will, among other things, expand hedging tools 
available to market participants and continue the reduction of the 
premium cost of buying protection. The Exchange believes that Monday 
and Wednesday IWM Expirations will allow market participants to 
purchase IWM based on their timing as needed and allow them to tailor 
their investment and hedging needs more effectively.
2. Statutory Basis
    For the reasons set forth above, the Exchange believes the proposed 
rule change is consistent with Section 6(b) of the Act \17\ in general, 
and furthers the objectives of Sections 6(b)(4) and (5) of the Act,\18\ 
in that it is designed to promote just and equitable principles of 
trade, 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 by providing the investing public and 
other market participants more flexibility to closely tailor their 
investment and hedging decisions in IWM options, thus allowing them to 
better manage their risk exposure.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(4) and (5).
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    In particular, the Exchange believes the STOS Program has been 
successful to date and that Monday and Wednesday IWM Expirations should 
simply expand the ability of investors to hedge risk against market 
movements stemming from economic releases or market events that occur 
throughout the month in the same way that the STOS Program has expanded 
the landscape of hedging. Similarly, the Exchange believes Monday and 
Wednesday IWM Expirations should create greater trading and hedging 
opportunities, as well as flexibility that will provide Members with 
the ability to tailor their investment objectives more effectively.
    The Exchange currently lists Monday and Wednesday SPY and QQQ

[[Page 69315]]

Expirations.\19\ Also, Cboe currently permits Monday and Wednesday 
expirations for other options with a weekly expiration, such as options 
on SPX, XSP, RUT, and MRUT pursuant to its Nonstandard Expirations 
Pilot Program.\20\ Phlx \21\ and ISE \22\ currently permit Monday and 
Wednesday expirations for other options with a weekly expiration on NDX 
pursuant to their Nonstandard Expirations Pilot Programs.
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    \19\ See Commentary .07(a) and (g) to Rule 6.4-O.
    \20\ Supra note 10.
    \21\ Supra note 11.
    \22\ Supra note 12.
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    With the exception of Monday expiration series that are scheduled 
to expire on a holiday, there are no material differences in the 
treatment of Monday and Wednesday IWM Expirations for Short Term Option 
Series. The Exchange believes that it is consistent with the Act to 
treat Monday expiration series that expire on a holiday differently 
than Wednesday or Friday expiration series, since the proposed 
treatment for Monday expiration series will result in an expiration 
date that is closer in time to the scheduled expiration date of the 
series, and therefore may be more representative of anticipated market 
conditions. Monday SPY and QQQ expirations are treated in this manner 
today.\23\ Cboe \24\ uses the same procedure for SPX, XSP, RUT, and 
MRUT options with Monday expirations that are scheduled to expire on a 
holiday, as do Phlx \25\ and ISE \26\ for NDX options with Monday 
expirations that are listed pursuant to their Nonstandard Expirations 
Pilot Programs, respectively.
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    \23\ See Commentary .07(a) to Rule 6.4-O.
    \24\ Supra note 10.
    \25\ Supra note 11.
    \26\ Supra note 12.
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    Given the similarities between Monday and Wednesday SPY and QQQ 
Expirations and the proposed Monday and Wednesday IWM Expirations, the 
Exchange believes that applying the provisions in Commentary .07(a) to 
Rule 6.4-O, which currently apply to Monday and Wednesday SPY and QQQ 
Expirations, to Monday and Wednesday IWM Expirations is justified. For 
example, the Exchange believes that allowing Monday and Wednesday IWM 
Expirations and monthly IWM expirations in the same week will benefit 
investors and minimize investor confusion by providing Monday and 
Wednesday IWM Expirations in a continuous and uniform manner. The 
Exchange also believes that it is appropriate to amend Commentary 
.07(a) to Rule 6.4-O, to clarify that no Short Term Option Series may 
expire on the same day as an expiration of Quarterly Options Series on 
the same class, same as SPY and QQQ. The Exchange also believes the 
non-substantive conforming change to Commentary .07(a) to Rule 6.4-O 
would add clarity and transparency to the STOS Program to the benefit 
of investors.\27\
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    \27\ See supra note 15.
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    The Exchange represents that it has an adequate surveillance 
program in place to detect manipulative trading in Monday and Wednesday 
expirations, including Monday and Wednesday IWM Expirations, in the 
same way that it monitors trading in the current Short Term Option 
Series and trading in Monday and Wednesday SPY and QQQ Expirations. The 
Exchange also represents that it has the necessary systems capacity to 
support the new options series. Finally, the Exchange does not believe 
that any market disruptions will be encountered with the introduction 
of Monday and Wednesday IWM Expirations.

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. In this regard and as 
indicated above, the Exchange notes that the rule change is being 
proposed as a competitive response to a filing submitted by Phlx.\28\ 
The Exchange also notes that having Monday and Wednesday IWM 
Expirations is not a novel proposal, as Monday and Wednesday SPY and 
QQQ Expirations are currently listed on the Exchange.\29\ Cboe uses the 
same procedure for SPX, XSP, RUT, and MRUT options with Monday 
expirations that are listed pursuant to its Nonstandard Expirations 
Pilot Program and that are scheduled to expire on a holiday,\30\ as do 
Phlx \31\ and ISE \32\ for NDX options with Monday expirations that are 
listed pursuant to their Nonstandard Expirations Pilot Programs, 
respectively.
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    \28\ See supra note 5 (approval of Phlx filing).
    \29\ See Commentary .07 to Rule 6.4-O.
    \30\ Supra note 10.
    \31\ Supra note 11.
    \32\ Supra note 12.
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    The Exchange does not believe the proposal will impose any burden 
on intra-market competition, as all market participants will be treated 
in the same manner under this proposal. Additionally, the Exchange does 
not believe the proposal will impose any burden on inter-market 
competition, as nothing prevents the other options exchanges from 
proposing similar rules to list and trade Short-Term Option Series with 
Monday and Wednesday expirations.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    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 \33\ and Rule 19b-
4(f)(6) thereunder.\34\
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    \33\ 15 U.S.C. 78s(b)(3)(A).
    \34\ 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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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act normally does not become operative for 30 days after the date of 
its filing. However, Rule 19b-4(f)(6)(iii) \35\ permits the Commission 
to designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The 
Commission notes that it recently approved Phlx's substantially similar 
proposal to list and trade Monday IWM Expirations and Wednesday IWM 
Expirations.\36\ The Exchange stated that waiver of the operative delay 
is consistent with the protection of investors and the public interest 
as it would encourage fair competition among exchanges by allowing the 
Exchange to compete effectively with Phlx by having the ability to list 
and trade the same Monday and Wednesday IWM Expirations that Phlx is 
able to list and trade. For these reasons, the Commission believes that 
the proposed

[[Page 69316]]

rule change presents no novel issues and that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest, and will allow the Exchange to remain competitive with 
other exchanges. Accordingly, the Commission hereby waives the 
operative delay and designates the proposed rule change operative upon 
filing.\37\
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    \35\ 17 CFR 240.19b-4(f)(6)(iii).
    \36\ See supra note 5.
    \37\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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 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

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEArca-2021-100 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-NYSEArca-2021-100. 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 business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the 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-NYSEArca-2021-100 and should be 
submitted on or before December 28, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\38\
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    \38\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-26444 Filed 12-6-21; 8:45 am]
BILLING CODE 8011-01-P


