Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Extension of a Pilot Program That Increases Position and Exercise Limits for Options on the iShares® Russell 2000® Index Fund, 38115-38116 [E7-13506]

Download as PDF Federal Register / Vol. 72, No. 133 / Thursday, July 12, 2007 / Notices change be, and hereby is, approved on an accelerated basis. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.44 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–13497 Filed 7–11–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56021; File No. SR– NYSEArca–2007–58] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Extension of a Pilot Program That Increases Position and Exercise Limits for Options on the iShares Russell 2000 Index Fund July 6, 2007. 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 June 22, 2007, NYSE Arca, Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been substantially prepared by NYSE Arca. NYSE Arca has filed the proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b–4(f)(6) thereunder,4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change rwilkins on PROD1PC63 with NOTICES NYSE Arca proposes to amend Rule 6.8 in order to extend the pilot program (‘‘IWM Pilot’’) which allows for increased position and exercise limits on options overlying the iShares Russell 2000 Index Fund (‘‘IWM’’). The text of the proposed rule change is available at NYSE Arca, the Commission’s Public Reference Room, and https://www.nysearca.com. 44 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b–4(f)(6). 1 15 VerDate Aug<31>2005 16:42 Jul 11, 2007 Jkt 211001 II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NYSE Arca 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. NYSE Arca 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 this rule change is to extend the IWM Pilot for a six-month period, through January 18, 2008,5 and to make non-substantive changes to simplify the rule text describing the IWM Pilot. The IWM Pilot increases the position and exercise limits for IWM options traded on the Exchange. The Exchange is not proposing any other changes to the IWM Pilot at this time. NYSE Arca represents that it has not encountered any problems or difficulties relating to the IWM Pilot since its inception. The proposal that established the IWM Pilot was designated by the Commission to be effective and operative upon filing and provided that the pilot would run through July 22, 2007.6 At that time, the Exchange amended Commentary .06 to Rule 6.8 on a six-month pilot basis to exempt options on IWM from the Rule 6.8 Pilot Program. Under the Rule 6.8 Pilot Program, the position and exercise limits for IWM would have been reduced on January 22, 2007 from 500,000 to 250,000 contracts. The Exchange proposed to allow position and exercise limits for options on IWM to remain at 500,000 contracts on a pilot basis, from January 25, 2007 through July 22, 2007. In June 2005, as a result of a 2-for-1 stock split, the position limit for IWM options was temporarily increased from 250,000 contracts (covering 25,000,000 shares) to 500,000 contracts (covering 5 The actual time period for the extension will be slightly less than six months. January 18, 2008 is the third Friday of the month (or expiration Friday), which is the day on which January 2008 IWM options will expire. 6 See Securities Exchange Act Release No. 55185 (January 29, 2007), 72 FR 5481 (February 6, 2007) (SR–NYSEArca–2007–10). PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 38115 50,000,000 shares). At the time of the split, the furthest IWM option expiration date was January 2007. Therefore, the temporary increase of the IWM position limit would have reverted to the pre-split level (as provided for in connection with the Rule 6.8 Pilot Program) of 250,000 contracts after expiration in January 2007, or on January 22, 2007. The Exchange described in the proposal that a position limit of 250,000 contracts is too low and may be a deterrent to the successful trading of IWM options. The Exchange stated that options on IWM are 1/10th the size of options on the Russell 2000 Index (‘‘RUT’’), which have a position limit of 50,000 contracts.7 Traders on NYSE Arca who trade IWM options to hedge positions in RUT options would likely find a position limit of 250,000 contracts in IWM options too restrictive and insufficient to properly hedge. For example, if a trader held 50,000 RUT options and wanted to hedge that position with IWM options, the trader would need—at a minimum—500,000 IWM options to properly hedge the position. Therefore, the Exchange believes that a position limit of 250,000 contracts is too low and may adversely affect market participants’ ability to provide liquidity in this product. As the Exchange also described in the proposal that established the IWM Pilot, IWM options have grown to become one of the largest options contracts in terms of trading volume. For example, through May 29, 2007 year-to-date industry volume in IWM options has averaged over 460,000 contracts per day, for a total of over 61 million contracts. In contrast, QQQQ options, which have a position limit of 900,000 contracts, have averaged almost 575,000 contracts per day. The Exchange believes that maintaining the increased position and exercise limits 8 for IWM options will lead to a more liquid and competitive market environment for IWM options that will benefit all investors interested in trading this product. As a result, the Exchange requests that the Commission extend the pilot for an additional sixmonth time period, through January 18, 2008. 7 See NYSE Arca Rule 6.8 Commentary .06(b). to Commentary .03 of NYSE Arca Rule 6.9, the exercise limit established under Rule 6.9 for IWM options shall be equivalent to the position limit prescribed for IWM options in Commentary .06 under Rule 6.8. The increased exercise limits would only be in effect during the pilot period, to run from July 22, 2007 through January 18, 2008. 8 Pursuant E:\FR\FM\12JYN1.SGM 12JYN1 38116 Federal Register / Vol. 72, No. 133 / Thursday, July 12, 2007 / Notices 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with and furthers the objectives of Section 6(b)(5) of the Act,9 in that it is designed to promote just and equitable principles of trade, 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. 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. 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 forgoing rule change does not: (1) Significantly affect the protection of investors or the public interest; (2) impose any significant burden on competition; and (3) become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 10 and Rule 19b– 4(f)(6) thereunder.11 A proposed rule change filed under 19b–4(f)(6) normally may not become operative prior to 30 days after the date of filing.12 However, Rule 19b– 4(f)(6)(iii) 13 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. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest 9 15 U.S.C. 78f(b)(5). U.S.C. 78s(b)(3)(A). 11 17 CFR 240.19b–4(f)(6). 12 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 19b-4(f)(6)(iii) requires that a self-regulatory organization submit to 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 the fiveday pre-filing notice requirement. 13 Id. rwilkins on PROD1PC63 with NOTICES 10 15 VerDate Aug<31>2005 16:42 Jul 11, 2007 Jkt 211001 because such waiver would permit position and exercise limits for options on IWM to continue at 500,000 option contracts for an approximately sixmonth pilot period. For this reason, the Commission designates the proposed rule change to be operative upon filing with the Commission.14 At any time within 60 days of the filing of such proposed rule change the Commission may summarily abrogate 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. the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of NYSE Arca. 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–NYSEArca-2007–58 and should be submitted on or before August 2, 2007. IV. Solicitation of Comments For the Commission, by the Division of Market Regulation, pursuant to delegated authority.15 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–13506 Filed 7–11–07; 8:45 am] 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 BILLING CODE 8010–01–P DEPARTMENT OF TRANSPORTATION • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NYSEArca-2007–58 on the subject line. Maritime Administration [USCG–2007–28532] Port Dolphin Energy LLC, Port Dolphin Energy Liquefied Natural Gas Deepwater Port License Application Maritime Administration, DOT. Notice of intent; notice of public meeting; request for comments. Paper Comments AGENCY: • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca-2007–58. This file number should be included on the subject line if e-mail 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 (https://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 inspection and copying in ACTION: 14 For the purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 SUMMARY: The Maritime Administration announces that the Coast Guard, in coordination with the Maritime Administration, will prepare an Environmental Impact Statement (EIS) as part of the environmental review of this license application. The application describes a project that would be located approximately 28 miles off the western coast of Florida, and approximately 42 miles from Port Manatee, Manatee County, Florida. Publication of this notice begins a scoping process that will help identify and determine the scope of environmental issues to be addressed in the EIS. This notice requests public participation in the scoping process and provides information on how to participate. DATES: The public meeting in Palmetto, FL will be held on July 25, 2007. The public meeting will be held from 6 p.m. to 8 p.m. and will be preceded by an open house from 4:30 p.m. to 5:30 p.m. The public meeting may end later than the stated time, depending on the 15 17 E:\FR\FM\12JYN1.SGM CFR 200.30–3(a)(12). 12JYN1

Agencies

[Federal Register Volume 72, Number 133 (Thursday, July 12, 2007)]
[Notices]
[Pages 38115-38116]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-13506]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56021; File No. SR-NYSEArca-2007-58]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to the 
Extension of a Pilot Program That Increases Position and Exercise 
Limits for Options on the iShares[supreg] Russell 2000[supreg] Index 
Fund

July 6, 2007.
    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 June 22, 2007, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been substantially prepared by NYSE Arca. NYSE Arca has filed the 
proposal pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-
4(f)(6) thereunder,\4\ which renders the proposal effective upon filing 
with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    NYSE Arca proposes to amend Rule 6.8 in order to extend the pilot 
program (``IWM Pilot'') which allows for increased position and 
exercise limits on options overlying the iShares[supreg] Russell 
2000[supreg] Index Fund (``IWM''). The text of the proposed rule change 
is available at NYSE Arca, the Commission's Public Reference Room, and 
https://www.nysearca.com.

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

    In its filing with the Commission, NYSE Arca 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. NYSE Arca 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 this rule change is to extend the IWM Pilot for a 
six-month period, through January 18, 2008,\5\ and to make non-
substantive changes to simplify the rule text describing the IWM Pilot. 
The IWM Pilot increases the position and exercise limits for IWM 
options traded on the Exchange. The Exchange is not proposing any other 
changes to the IWM Pilot at this time. NYSE Arca represents that it has 
not encountered any problems or difficulties relating to the IWM Pilot 
since its inception.
---------------------------------------------------------------------------

    \5\ The actual time period for the extension will be slightly 
less than six months. January 18, 2008 is the third Friday of the 
month (or expiration Friday), which is the day on which January 2008 
IWM options will expire.
---------------------------------------------------------------------------

    The proposal that established the IWM Pilot was designated by the 
Commission to be effective and operative upon filing and provided that 
the pilot would run through July 22, 2007.\6\ At that time, the 
Exchange amended Commentary .06 to Rule 6.8 on a six-month pilot basis 
to exempt options on IWM from the Rule 6.8 Pilot Program. Under the 
Rule 6.8 Pilot Program, the position and exercise limits for IWM would 
have been reduced on January 22, 2007 from 500,000 to 250,000 
contracts. The Exchange proposed to allow position and exercise limits 
for options on IWM to remain at 500,000 contracts on a pilot basis, 
from January 25, 2007 through July 22, 2007.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 55185 (January 29, 
2007), 72 FR 5481 (February 6, 2007) (SR-NYSEArca-2007-10).
---------------------------------------------------------------------------

    In June 2005, as a result of a 2-for-1 stock split, the position 
limit for IWM options was temporarily increased from 250,000 contracts 
(covering 25,000,000 shares) to 500,000 contracts (covering 50,000,000 
shares). At the time of the split, the furthest IWM option expiration 
date was January 2007. Therefore, the temporary increase of the IWM 
position limit would have reverted to the pre-split level (as provided 
for in connection with the Rule 6.8 Pilot Program) of 250,000 contracts 
after expiration in January 2007, or on January 22, 2007.
    The Exchange described in the proposal that a position limit of 
250,000 contracts is too low and may be a deterrent to the successful 
trading of IWM options. The Exchange stated that options on IWM are 1/
10th the size of options on the Russell 2000[supreg] Index (``RUT''), 
which have a position limit of 50,000 contracts.\7\ Traders on NYSE 
Arca who trade IWM options to hedge positions in RUT options would 
likely find a position limit of 250,000 contracts in IWM options too 
restrictive and insufficient to properly hedge. For example, if a 
trader held 50,000 RUT options and wanted to hedge that position with 
IWM options, the trader would need--at a minimum--500,000 IWM options 
to properly hedge the position. Therefore, the Exchange believes that a 
position limit of 250,000 contracts is too low and may adversely affect 
market participants' ability to provide liquidity in this product.
---------------------------------------------------------------------------

    \7\ See NYSE Arca Rule 6.8 Commentary .06(b).
---------------------------------------------------------------------------

    As the Exchange also described in the proposal that established the 
IWM Pilot, IWM options have grown to become one of the largest options 
contracts in terms of trading volume. For example, through May 29, 2007 
year-to-date industry volume in IWM options has averaged over 460,000 
contracts per day, for a total of over 61 million contracts. In 
contrast, QQQQ options, which have a position limit of 900,000 
contracts, have averaged almost 575,000 contracts per day.
    The Exchange believes that maintaining the increased position and 
exercise limits \8\ for IWM options will lead to a more liquid and 
competitive market environment for IWM options that will benefit all 
investors interested in trading this product. As a result, the Exchange 
requests that the Commission extend the pilot for an additional six-
month time period, through January 18, 2008.
---------------------------------------------------------------------------

    \8\ Pursuant to Commentary .03 of NYSE Arca Rule 6.9, the 
exercise limit established under Rule 6.9 for IWM options shall be 
equivalent to the position limit prescribed for IWM options in 
Commentary .06 under Rule 6.8. The increased exercise limits would 
only be in effect during the pilot period, to run from July 22, 2007 
through January 18, 2008.

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[[Page 38116]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with and furthers the objectives of Section 6(b)(5) of the Act,\9\ in 
that it is designed to promote just and equitable principles of trade, 
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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.

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 forgoing rule change does not: (1) Significantly affect 
the protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) become operative for 30 days 
after the date of this filing, or such shorter time as the Commission 
may designate, it has become effective pursuant to Section 19(b)(3)(A) 
of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under 19b-4(f)(6) normally may not 
become operative prior to 30 days after the date of filing.\12\ 
However, Rule 19b-4(f)(6)(iii) \13\ 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. The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest because such waiver 
would permit position and exercise limits for options on IWM to 
continue at 500,000 option contracts for an approximately six-month 
pilot period. For this reason, the Commission designates the proposed 
rule change to be operative upon filing with the Commission.\14\
---------------------------------------------------------------------------

    \12\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to 
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 the five-day pre-filing 
notice requirement.
    \13\ Id.
    \14\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule 
change the Commission may summarily abrogate 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.

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 (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2007-58 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2007-58. This 
file number should be included on the subject line if e-mail 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 (https://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 inspection 
and copying in the Commission's Public Reference Room, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of NYSE Arca. 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-NYSEArca-2007-58 and should 
be submitted on or before August 2, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-13506 Filed 7-11-07; 8:45 am]
BILLING CODE 8010-01-P
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