82 FR 22595 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish INET Ports

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 93 (May 16, 2017)

Page Range		22595-22598
FR Document		2017-09821
Federal Register, Volume 82 Issue 93 (Tuesday, May 16, 2017)
[Federal Register Volume 82, Number 93 (Tuesday, May 16, 2017)]
[Notices]
[Pages 22595-22598]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-09821]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80649; File No. SR-GEMX-2017-07]


Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Establish INET 
Ports

May 10, 2017.
    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 April 27, 2017, Nasdaq GEMX, LLC (``GEMX'' 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 prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to establish ports that members use to 
connect to the Exchange with the migration of the Exchange's trading 
system to the Nasdaq INET architecture.
    The text of the proposed rule change is available on the Exchange's 
Web site at www.ise.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 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 purpose of the proposed rule change is to establish ports that 
members use to connect to the Exchange with the migration of the 
Exchange's

[[Page 22596]]

trading system to the Nasdaq INET architecture.\3\ In particular, the 
Exchange proposes to establish the following connectivity options that 
are available in connection with the re-platform of the Exchange's 
trading system: Specialized Quote Feed (``SQF''), SQF Purge, Ouch to 
Trade Options (``OTTO''), Clearing Trade Interface (``CTI''), Financial 
Information eXchange (``FIX''), FIX Drop, Disaster Recovery, and Market 
Data. These connectivity options, which are described in more detail 
below, are the same as connectivity options currently used to connect 
to the Exchange's affiliates, including Nasdaq Phlx (``Phlx''), Nasdaq 
Options Market (``NOM''), and Nasdaq BX (``BX'').\4\ The Exchange 
recently filed a proposed rule change to adopt fees for its port 
offerings, which are currently offered free of charge,\5\ and is filing 
this proposed rule change to establish the ports themselves.
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    \3\ See Securities Exchange Act Release No. 80011 (February 10, 
2017), 82 FR 10927 (February 16, 2017) (SR-ISEGemini-2016-17).
    \4\ See Phlx Pricing Schedule, VII. Other Member Fees, B. Port 
Fees; NOM Rules, Chapter XV Options Pricing, Sec. 3 NOM--Ports and 
other Services; BX Rules, Chapter XV Options Pricing, Sec. 3 BX--
Ports and other Services.
    \5\ See Securities Exchange Act Release No. 80213 (March 10, 
2017), 82 FR 14066 (March 16, 2017) (SR-ISEGemini-2017-10).
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1. Specialized Quote Feed
    SQF is an interface that allows market makers to connect and send 
quotes, sweeps and auction responses into the Exchange. Data includes 
the following: (1) Options Auction Notifications (e.g., opening 
imbalance, Flash, PIM, Solicitation and Facilitation or other 
information); (2) Options Symbol Directory Messages; (3) System Event 
Messages (e.g., start of messages, start of system hours, start of 
quoting, start of opening); (4) Option Trading Action Messages (e.g., 
halts, resumes); (5) Execution Messages (6) Quote Messages (quote/sweep 
messages, risk protection triggers or purge notifications).
2. SQF Purge
    SQF Purge is a specific port for the SQF interface that only 
receives and notifies of purge requests from the market maker. 
Dedicated SQF Purge Ports enable market makers to seamlessly manage 
their ability to remove their quotes in a swift manner.
3. Ouch to Trade Options
    OTTO is an interface that allows market participants to connect and 
send orders, auction orders and auction responses into the Exchange. 
Data includes the following: (1) Options Auction Notifications (e.g., 
Flash, PIM, Solicitation and Facilitation or other information); (2) 
Options Symbol Directory Messages; (3) System Event Messages (e.g., 
start of messages, start of system hours, start of quoting, start of 
opening); (5) Option Trading Action Messages (e.g., halts, resumes); 
(6) Execution Messages (7) Order Messages (order messages, risk 
protection triggers or purge notifications).
4. Clearing Trade Interface
    CTI is a real-time clearing trade update is a message that is sent 
to a member after an execution has occurred and contains trade details. 
The message containing the trade details is also simultaneously sent to 
The Options Clearing Corporation. The information includes, among other 
things, the following: (i) The Clearing Member Trade Agreement or 
``CMTA'' or The Options Clearing Corporation or ``OCC'' number; (ii) 
Exchange badge or house number; (iii) the Exchange internal firm 
identifier; and (iv) an indicator which will distinguish electronic and 
non-electronically delivered orders; (v) liquidity indicators and 
transaction type for billing purposes; (vi) capacity
5. Financial Information eXchange
    FIX is an interface that allows market participants to connect and 
send orders and auction orders into the Exchange. Data includes the 
following: (1) Options Symbol Directory Messages; (2) System Event 
Messages (e.g., start of messages, start of system hours, start of 
quoting, start of opening); (3) Option Trading Action Messages (e.g., 
halts, resumes); (4) Execution Messages (5) Order Messages (order 
messages, risk protection triggers or purge notifications).
6. FIX Drop
    FIX Drop is a real-time order and execution update is a message 
that is sent to a member after an order been received/modified or an 
execution has occurred and contains trade details. The information 
includes, among other things, the following: (1) Executions (2) 
cancellations (3) modifications to an existing order (4) busts or post-
trade corrections.
7. Disaster Recovery
    Disaster Recovery ports provide connectivity to the exchange's 
disaster recovery data center in Chicago to be utilized in the event 
the exchange has to fail over during the trading day. DR Ports are 
available for SQF, SQF Purge, CTI, OTTO, FIX and FIX Drop.
8. Market Data
    Market Data ports provide connectivity to the Exchange's 
proprietary market data feeds, including the Nasdaq GEMX Real-time 
Depth of Market Raw Data Feed (``Depth of Market Feed''),\6\ the Nasdaq 
GEMX Order Feed (``Order Feed''),\7\ the Nasdaq GEMX Top Quote Feed 
(``Top Quote Feed''),\8\ and the Nasdaq GEMX Trades Feed (``Trades 
Feed'').\9\ The Depth Feed, Order Feed, and Top Quote Feed have each 
previously been established as market data offerings of the 
Exchange,\10\ and market participants are charged for subscriptions to 
these products.\11\ The Trades Feed is a free market data product 
provided to subscribers of at least one of the fee liable market data 
products described above. In connection with the adoption of Market 
Data ports described above, the Exchange further proposes to establish 
the Trades Feed. Market Data ports are available via multicast, TCP, or 
as an intra-day snapshot, except that the intra-day snapshot option is 
available solely for the Depth of Market Feed and Top Quote Feed. In 
connection with the adoption of Market Data ports, which

[[Page 22597]]

will provide connectivity to the four market data feeds described 
above, the Exchange also proposes to remove references to ITCH-to-Trade 
Options (``ITTO'') ports from the Schedule of Fees and replace them 
with references to Market Data ports. ITTO is currently defined as a 
port that provides connectivity to the Depth Feed. As noted above, 
Market Data ports will provide access to Depth Feed along with the 
Order Feed, Top Quote Feed, and Trades Feed.
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    \6\ The Depth Feed, provides aggregate quotes and orders at the 
top five price levels on the Exchange, and provides subscribers with 
a consolidated view of tradable prices beyond the BBO, showing 
additional liquidity and enhancing transparency for GEMX traded 
options. The data provided for each instrument includes the symbols 
(series and underlying security), put or call indicator, expiration 
date, the strike price of the series, and trading status. In 
addition, subscribers are provided with total quantity, customer 
quantity (if present), price, and side (i.e., bid/ask). This 
information is provided for each of the five indicated price levels 
on the Depth Feed. The feed also provides participants of imbalances 
on opening/reopening.
    \7\ The Order Feed provides information on new orders resting on 
the book. In addition, the feed also announces auctions. The data 
provided for each instrument includes the symbols (series and 
underlying security), put or call indicator, expiration date, the 
strike price of the series, and trading status. The feed also 
provides participants of imbalances on opening/reopening.
    \8\ The Top Quote Feed calculates and disseminates its best bid 
and offer position, with aggregated size (Total & Customer), based 
on displayable order and quote interest in the options market 
system. The feed also provides last trade information along with 
opening price, cumulative volume, high and low prices for the day. 
The data provided for each instrument includes the symbols (series 
and underlying security), put or call indicator, expiration date, 
the strike price of the series, and trading status.
    \9\ The Trades Feed displays last trade information along with 
opening price, cumulative volume, high and low prices for the day. 
The data provided for each instrument includes the symbols (series 
and underlying security), put or call indicator, expiration date, 
the strike price of the series, and trading status.
    \10\ See Securities Exchange Act Release No. 71087 (December 17, 
2013), 78 FR 77545 (December 23, 2013) (SR-Topaz-2013-17).
    \11\ See GEMX Schedule of Fees, Section V., Market Data.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Securities Exchange Act of 1934 (the ``Act'') \12\ in 
general, and furthers the objectives of Section 6(b)(5) of the Act \13\ 
in particular, in that it is designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
for a free and open market and a national market system, and, in 
general, to protect investors and the public interest.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is consistent 
with the protection of investors and the public interest as it 
establishes various ports used to connect to the GEMX INET trading 
system. The Exchange's port offerings are changing with the re-platform 
as the ports used by INET differ from the ports used to connect to the 
T7 trading system. Market participants that connect to the INET trading 
system may use the following ports mentioned above: SQF, SQF Purge, 
OTTO, CTI, FIX, FIX Drop, Disaster Recovery, and Market Data. These 
ports are the same as ports currently used by the Exchange's 
affiliates, and therefore offer a familiar experience for market 
participants. The ports described in this filing provide a range of 
important features to market participants, including the ability to 
submit orders and quotes, receive market data, and perform other 
functions necessary to manage trading on the Exchange. The Exchange 
recently adopted port fees for the ports described in this filing, and 
believes that filing separately to establish these ports will increase 
transparency to market participants regarding connectivity options 
provided by the Exchange.
    The Exchange also believes that it is consistent with the 
protection of investors and public interest to establish the Trades 
Feed as this feed, which is currently provided free of charge, provides 
valuable trade information to subscribers. The Trades Feed designed to 
promote just and equitable principles of trade by providing all 
subscribers with data that should enable them to make informed 
decisions on trading in GEMX options by using the data to assess 
current market conditions that directly affect such decisions. The 
market data provided by this feed removes impediments to, and is 
designed to further perfect, the mechanisms of a free and open market 
and a national market system by making the GEMX market more transparent 
and accessible to market participants making routing decisions 
concerning their options orders.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\14\ the Exchange 
does not believe that the proposed rule change will impose any burden 
on intermarket or intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. As explained 
above, the Exchange is establishing the ports used to connect to the 
GEMX INET trading system. The Exchange does not believe that 
establishing these ports, which are currently offered free of charge, 
will have any competitive impact. Similarly, the exchange does not 
believe that establishing the Trades Feed, which is also a free 
offering, will have any competitive impact.
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    \14\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or 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)(iii) of the Act \15\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \16\ 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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    In its filing, GEMX requested that the Commission waive the 30-day 
operative delay in order to enable the Exchange to more quickly 
establish the Trades Feed and the ports used by members to connect to 
the Exchange's INET trading system. The Commission believes that such 
waiver is consistent with the protection of investors and the public 
interest. GEMX noted that its members have received numerous 
communications regarding the availability of the new port offerings, 
which are the same as the connectivity options used to connect to the 
Exchange's affiliates; in fact, members are already using these ports 
to connect to INET. Similarly, GEMX explained that the proposed Trades 
Feed has already been disclosed to members and that subscribers to GEMX 
market data have already been given access to the proposed Trades Feed. 
To avoid disrupting member usage of GEMX connectivity and data options, 
the Commission designates the proposed rule change to be operative upon 
filing.\17\
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    \17\ 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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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 [email protected]. Please include 
File Number SR-GEMX-2017-07 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.


[[Page 22598]]


All submissions should refer to File Number SR-GEMX-2017-07. 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 Web site (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 Web site 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-GEMX-2017-07 and should be 
submitted on or before June 6, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12) and (59).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09821 Filed 5-15-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 93 / Tuesday, May 16, 2017 / Notices 22595

is made in a manner or on a basis that 2. Rule 17d–3 under the Act provides SECURITIES AND EXCHANGE
does not unfairly discriminate against an exemption from section 17(d) and COMMISSION
any holders of the class or classes of rule 17d–1 to permit open-end
[Release No. 34–80649; File No. SR–GEMX–
securities to be purchased. investment companies to enter into 2017–07]
4. Applicants request relief under distribution arrangements pursuant to
section 6(c), discussed above, and rule 12b–1 under the Act. Applicants Self-Regulatory Organizations; Nasdaq
section 23(c)(3) from rule 23c–3 to the request an order under section 17(d) and GEMX, LLC; Notice of Filing and
extent necessary for the Funds to rule 17d–1 under the Act to the extent Immediate Effectiveness of Proposed
impose early withdrawal charges on necessary to permit the Fund to impose Rule Change To Establish INET Ports
shares of the Funds submitted for asset-based distribution and shareholder
repurchase that have been held for less May 10, 2017.
service fees. Applicants have agreed to Pursuant to Section 19(b)(1) of the
than a specified period. comply with rules 12b–1 and 17d–3 as
5. Applicants state that the early Securities Exchange Act of 1934
if those rules applied to closed-end (‘‘Act’’),1 and Rule 19b–4 thereunder,2
withdrawal charges they intend to investment companies, which they notice is hereby given that on April 27,
impose are functionally similar to believe will resolve any concerns that 2017, Nasdaq GEMX, LLC (‘‘GEMX’’ or
contingent deferred sales loads imposed might arise in connection with a Fund ‘‘Exchange’’) filed with the Securities
by open-end investment companies financing the distribution of its shares and Exchange Commission (‘‘SEC’’ or
under rule 6c–10 under the Act. Rule
through asset-based distribution fees. ‘‘Commission’’) the proposed rule
6c–10 permits open-end investment
For the reasons stated above, change as described in Items I and II,
companies to impose contingent
applicants submit that the exemptions below, which Items have been prepared
deferred sales loads, subject to certain
requested under section 6(c) are by the Exchange. The Commission is
conditions. Applicants note that rule
publishing this notice to solicit
6c–10 is grounded in policy necessary and appropriate in the public
comments on the proposed rule change
considerations supporting the interest and are consistent with the
from interested persons.
employment of contingent deferred protection of investors and the purposes
sales loads where there are adequate fairly intended by the policy and I. Self-Regulatory Organization’s
safeguards for the investor and state that provisions of the Act. Applicants further Statement of the Terms of Substance of
the same policy considerations support submit that the relief requested the Proposed Rule Change
imposition of early withdrawal charges pursuant to section 23(c)(3) will be The Exchange proposes to establish
in the interval fund context. In addition, consistent with the protection of ports that members use to connect to the
applicants state that early withdrawal investors and will insure that applicants Exchange with the migration of the
charges may be necessary for the do not unfairly discriminate against any Exchange’s trading system to the Nasdaq
distributor to recover distribution costs. holders of the class of securities to be INET architecture.
Applicants represent that any early purchased. Finally, applicants state that The text of the proposed rule change
withdrawal charge imposed by the the Funds’ imposition of asset-based is available on the Exchange’s Web site
Funds will comply with rule 6c–10 at www.ise.com, at the principal office
distribution and shareholder service
under the Act as if the rule were of the Exchange, and at the
fees is consistent with the provisions,
applicable to closed-end investment Commission’s Public Reference Room.
policies and purposes of the Act and
companies. The Funds will disclose
early withdrawal charges in accordance does not involve participation on a basis II. Self-Regulatory Organization’s
with the requirements of Form N–1A different from or less advantageous than Statement of the Purpose of, and
concerning contingent deferred sales that of other participants. Statutory Basis for, the Proposed Rule
loads. Change
Applicants’ Condition
In its filing with the Commission, the
Asset-Based Distribution and Exchange included statements
Applicants agree that any order
Shareholder Service Fees concerning the purpose of and basis for
granting the requested relief will be
1. Section 17(d) of the Act and rule subject to the following condition: the proposed rule change and discussed
17d–1 under the Act prohibit an any comments it received on the
Each Fund relying on the order will
affiliated person of a registered proposed rule change. The text of these
comply with the provisions of rules 6c–
investment company, or an affiliated statements may be examined at the
10, 12b–1, 17d–3, 18f–3, 22d–1, and, places specified in Item IV below. The
person of such person, acting as
where applicable, 11a–3 under the Act, Exchange has prepared summaries, set
principal, from participating in or
as amended from time to time, as if forth in sections A, B, and C below, of
effecting any transaction in connection
with any joint enterprise or joint those rules applied to closed-end the most significant aspects of such
arrangement in which the investment management investment companies, statements.
company participates unless the and will comply with the FINRA Sales
Charge Rule, as amended from time to A. Self-Regulatory Organization’s
Commission issues an order permitting Statement of the Purpose of, and
the transaction. In reviewing time, as if that rule applied to all closed-
end management investment Statutory Basis for, the Proposed Rule
applications submitted under section Change
17(d) and rule 17d–1, the Commission companies.
considers whether the participation of 1. Purpose
sradovich on DSK3GMQ082PROD with NOTICES

For the Commission, by the Division of
the investment company in a joint Investment Management, under delegated The purpose of the proposed rule
enterprise or joint arrangement is authority. change is to establish ports that
consistent with the provisions, policies Eduardo A. Aleman, members use to connect to the Exchange
and purposes of the Act, and the extent with the migration of the Exchange’s
Assistant Secretary.
to which the participation is on a basis
[FR Doc. 2017–09790 Filed 5–15–17; 8:45 am]
different from or less advantageous than 1 15 U.S.C. 78s(b)(1).
that of other participants. BILLING CODE 8011–01–P 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 19:45 May 15, 2017 Jkt 241001 PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 E:\FR\FM\16MYN1.SGM 16MYN1
Document Created: 2017-05-16 13:52:38
Document Modified: 2017-05-16 13:52:38
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 22595