Document ID: SEC-2017-0768-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2017-05-12T04:00Z

[Federal Register Volume 82, Number 91 (Friday, May 12, 2017)]
[Notices]
[Pages 22170-22173]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09607]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80619; File No. SR-NYSEMKT-2017-23]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change To Harmonize the Requirements of the NYSE MKT 
Company Guide With Respect to Periodic Reporting With Those of the NYSE

May 8, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on April 25, 2017, NYSE MKT LLC (the ``Exchange'' or ``NYSE 
MKT'') filed with the Securities and Exchange Commission (the ``SEC'' 
or ``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been 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\ 15 U.S.C. 78a.
    \3\ 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 harmonize the requirements of the NYSE MKT 
Company Guide (the ``Company Guide'') with respect to periodic 
reporting with those of the NYSE. The proposed rule change is available 
on the Exchange's Web site 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 harmonize the requirements of the Company 
Guide with respect to periodic reporting with those of the NYSE. A 
consistent approach among the two NYSE sister exchanges will avoid 
confusion among investors and companies and their service providers 
about the applicable rules. Currently, the Exchange provides companies 
that are late in making required filings with a compliance plan under 
its general provisions for companies that are non-compliant with 
Exchange rules, as set forth in Section 1009 of the Company Guide. 
Section 1009 gives the Exchange the discretion to grant companies up to 
18 months to cure events of noncompliance and does not provide specific 
guidance with respect to how compliance periods should be administered 
for companies late in submitting their filings. By contrast, Section 
802.01E of the NYSE Listed Company Manual limits companies to a maximum 
cure period of 12 months to submit all delayed filings and includes 
specific provisions for determining how much time companies should be 
given to cure within the context of that maximum 12 months and what is 
required to be eligible for that additional time. As such, the Exchange 
believes that the NYSE's process for dealing with delayed filings is 
more stringent and more transparent than its own and believes that it 
is appropriate to harmonize its own process with that of the NYSE. The 
Exchange also proposes to harmonize its requirements with respect to 
semi-annual reporting by foreign private issuers with that of the NYSE, 
as the NYSE requirement is more precise. This greater precision will 
enable the Exchange to subject this semi-annual reporting obligation to 
the same compliance regime as it is proposing for other delayed 
filings.
Semi-Annual Reporting by Foreign Private Issuers
    Section 110(d) of the Company Guide currently requires all foreign-
incorporated listed companies to publish, at least semi-annually, an 
English language version of their interim financial statements. As part 
of its harmonization with the rules of the NYSE and adoption of a more 
explicit compliance approach,\4\ the Exchange proposes to adopt new 
Section 110(e) as a more specific interim reporting requirement for 
listed foreign private issuers.\5\ Under proposed Section 110(e), each 
listed foreign private issuer will be required, at a minimum, to submit 
to the SEC a Form 6-K that includes (i) an interim balance sheet as of 
the end of its second fiscal quarter and (ii) a semi-annual income 
statement that covers its first two fiscal quarters. This Form 6-K must 
be submitted no later than six months following the end of the 
company's second fiscal quarter. The financial information included in 
the Form 6-K must be presented in English, but does not have to be 
reconciled to U.S. GAAP.
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    \4\ See Section 203.03 of the NYSE Listed Company Manual.
    \5\ Foreign-incorporated listed companies that are not foreign 
private issuers are required to file quarterly reports on Form 10-Q 
as domestic filers, so proposed Section 110(e) is not relevant to 
them. Existing Section 110(e) will be renumbered as Section 110(f).
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Amendments to Chapter Six of the Company Guide
    Section 610(a) currently requires listed companies to provide 
specific enumerated disclosures with regard to outstanding options.\6\ 
The Exchange

[[Page 22171]]

proposes to eliminate these requirements. The Exchange notes that 
companies are required to include disclosure in their Form 10-K in 
relation to options available under equity compensation plans pursuant 
to Item 201(d) of Regulation S-K and options issued as executive 
compensation pursuant to Item 402 of Regulation S-K. Consequently, the 
Exchange believes it is appropriate to defer to the SEC in determining 
what disclosures should be required with respect to options and to 
delete its own disclosure requirements from Section 610(a).
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    \6\ Section 610(a) provides that the company must disclose in 
its annual report to security holders, for the year covered by the 
report: (a) The number of unoptioned shares available at the 
beginning and at the close of the year for the granting of options 
under an option plan; and (b) any changes in the exercise price of 
outstanding options, through cancellation and reissuance or 
otherwise, except price changes resulting from the normal operation 
of anti-dilution provisions of the options.
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    Section 610(a) currently specifies that a company that fails to 
file its annual report on Forms 10-K, 20-F, 40-F or N-CSR with the SEC 
in a timely manner is subject to delisting pursuant to Section 1002(d). 
The Exchange proposes to amend this provision to provide that companies 
delayed in making these filings will be subject to proposed Section 
1007 as discussed below.
    Prior to an amendment to Section 610 in 2009,\7\ Section 610 
required a listed company to physically deliver its annual report filed 
with the SEC to shareholders each year. In its amended form, Section 
610 no longer requires companies to physically deliver their annual 
reports but relies instead on the fact that listed company annual 
reports are available on the SEC Web site and are required to be made 
available on or through the Web site of the applicable listed company. 
Proposed Section 1007 as described below establishes compliance 
procedures for companies that are delayed in filing their annual 
reports with the SEC. In light of the foregoing, the Exchange proposes 
to delete Sections 611 (Time of Publication), 612 (Request for 
Extension) and 613 (Good Cause for Delay) of the Company Guide in their 
entirety. Section 611 specifies timeframes within which a company's 
hard copy annual report must be submitted to the Exchange and 
distributed to shareholders. The Exchange proposes to delete this 
provision as Section 610 no longer requires the delivery of hard copy 
annual reports and proposed Section 1007 will include detailed 
compliance requirements with respect to delayed annual report filings. 
Similarly, Section 612 sets forth a process for companies to request an 
extension of time from the Exchange to distribute hard copy annual 
reports to their shareholders. The Exchange proposes to delete this 
requirement, as companies are not required to deliver hard copy annual 
reports under the current rules and proposed Section 1007 will 
establish a process for granting companies additional time when they 
are delayed in submitting their annual reports to the SEC. Section 613 
specifies circumstances under which good cause may exist for a company 
being delayed in publishing its annual report. The Exchange proposes to 
delete this provision, as in the future all determinations as to the 
continued listing of companies that are delayed in their annual report 
filings will be made pursuant to the provisions of proposed Section 
1007.
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    \7\ See Securities Exchange Act Release No. 59685 (April 1, 
2009); 74 FR 16031 (April 8, 2009) (SR-NYSEMKT-2009-04).
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    Section 610(b) makes reference to providing notice of material news 
to the Exchange's StockWatch and Listing Qualifications Departments. 
The Exchange proposes to delete these references as those departments 
now have different names. In their place, the Exchange proposes to 
include a statement that companies should comply with the Exchange's 
material news policies set forth in Sections 401 and 402 of the Company 
Guide by providing notice to the Exchange's Market Watch Group pursuant 
to the material news notification requirements of Sections 401 and 402.
    Section 610(b) currently provides that a listed company that 
receives an audit opinion that contains a going concern 
``qualification'' must make a public announcement through the news 
media disclosing the receipt of such qualified opinion. The Exchange 
proposes to replace the reference to a going concern ``qualification'' 
with a reference to a going concern ``emphasis'' as this is a more 
correct characterization under the accounting literature. In addition, 
the Exchange proposes to provide that the public announcement of the 
existence of a going concern emphasis in an audit opinion must be made 
contemporaneously with the filing of the SEC report including the going 
concern emphasis, rather than within seven calendar days of such filing 
as is currently the case. The Exchange believes a going concern 
emphasis is material to investors and should be immediately disclosed.
Proposed Section 1007 SEC Annual and Quarterly Report Timely Filing 
Criteria
    Under proposed Section 1007, a company will incur a late filing 
delinquency and be subject to the procedures set forth in Section 1007 
on the date on which any of the following occurs:
     The company fails to file its annual report (Forms 10-K, 
20-F, 40-F or N-CSR) or its quarterly report on Form 10-Q or semi-
annual report on Form N-CSR (``Semi-Annual Form N-CSR'') with the SEC 
by the date such report was required to be filed by the applicable 
form, or if a Form 12b-25 was timely filed with the SEC, the extended 
filing due date for the annual report, Form 10-Q, or Semi-Annual Form 
N-CSR (for purposes of this Section 1007, the later of these two dates, 
along with any Semi-Annual Report Filing Due Date as defined below, 
will be referred to as the ``Filing Due Date'' and the failure to file 
a report by the applicable Filing Due Date, a ``Late Filing 
Delinquency'');
     a listed foreign private issuer fails to file the Form 6-K 
containing semi-annual financial information required by proposed 
Section 110(e) (the ``Semi-Annual Report'') by the date specified in 
that rule (the ``Semi-Annual Report Filing Due Date'');
     the company files its annual report without a financial 
statement audit report from its independent auditor for any or all of 
the periods included in such annual report (a ``Required Audit Report'' 
and the absence of a Required Audit Report, a ``Required Audit Report 
Delinquency'');
     the company's independent auditor withdraws a Required 
Audit Report or the company files a Form 8-K with the SEC pursuant to 
Item 4.02(b) thereof disclosing that it has been notified by its 
independent auditor that a Required Audit Report or completed interim 
review should no longer be relied upon (a ``Required Audit Report 
Withdrawal Delinquency''); or
     the company files a Form 8-K with the SEC pursuant to Item 
4.02(a) thereof to disclose that previously issued financial statements 
should no longer be relied upon because of an error in such financial 
statements or, in the case of a foreign private issuer, makes a similar 
disclosure in a Form 6-K filed with the SEC or by other means (a ``Non-
Reliance Disclosure'') and, in either case, the company does not refile 
all required corrected financial statements within 60 days of the 
issuance of the Non-Reliance Disclosure (an ``Extended Non-Reliance 
Disclosure Event'' and, together with a Late Filing Delinquency, a 
Required Audit Report Delinquency and a Required Audit Report 
Withdrawal Delinquency, a ``Filing Delinquency'') (for purposes of the 
cure periods described below, an Extended Non-Reliance Disclosure Event 
will be

[[Page 22172]]

deemed to have occurred on the date of original issuance of the Non-
Reliance Disclosure); if the Exchange believes that a company is 
unlikely to refile all required corrected financial statements within 
60 days after a Non-Reliance Disclosure or that the errors giving rise 
to such Non-Reliance Disclosure are particularly severe in nature, the 
Exchange may, in its sole discretion, determine earlier than 60 days 
that the applicable company has incurred a Filing Delinquency as a 
result of such Non-Reliance Disclosure.
    The Exchange will also deem a company to have incurred a Filing 
Delinquency if the company submits an annual report, Form 10-Q, or 
Semi-Annual Form N-CSR to the SEC by the applicable Filing Due Date, 
but such filing fails to include an element required by the applicable 
SEC form and the Exchange determines in the Exchange's sole discretion 
that such deficiency is material in nature.\8\
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    \8\ The following is a non-exclusive list of scenarios involving 
material filing elements that would cause the Exchange to deem the 
company to have incurred a Late Filing Delinquency: The filing does 
not include required financial statements or a required audit 
opinion; a required financial statement audit opinion includes 
qualifying or disclaiming language or the auditor provides an 
adverse financial statement audit opinion; a required financial 
statement audit opinion is unsigned or undated; there is a 
discrepancy between the period end date for required financial 
statements and the date cited in the related audit report; the 
company's auditor has not conducted a SAS 100 review with respect to 
the company's Form 10-Q; required chief executive officer or chief 
financial officer certifications are missing; a Sarbanes-Oxley Act 
Section 404 required internal control report or auditor 
certification is missing; the filing does not comply with the 
applicable SEC XBRL requirements; or the filing does not include 
signatures of officers or directors required by the applicable form.
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    The annual report, Form 10-Q, Semi-Annual Form N-CSR or Semi-Annual 
Report that gives rise to a Filing Delinquency shall be referred to 
herein and in proposed Section 1007 as the ``Delinquent Report.''
    Subsequent Late Reports. A company that has an uncured Filing 
Delinquency will not incur an additional Filing Delinquency if it fails 
to file a subsequent annual report, Form 10-Q, Semi-Annual Form N-CSR 
or Semi-Annual Report (a ``Subsequent Report'') by the applicable 
Filing Due Date for such Subsequent Report. However, in order for the 
company to cure its initial Filing Delinquency, no Subsequent Report 
may be delinquent or deficient on the date by which the initial Filing 
Delinquency is required to be cured.
    Notification and Cure Periods. Upon the occurrence of a Filing 
Delinquency, the Exchange will promptly (typically within five business 
days) send written notification (the ``Filing Delinquency 
Notification'') to a company of the procedures set forth below. Within 
five days of the date of the Filing Delinquency Notification, the 
company will be required to (a) contact the Exchange to discuss the 
status of the Delinquent Report and (b) issue a press release 
disclosing the occurrence of the Filing Delinquency, the reason for the 
Filing Delinquency and, if known, the anticipated date such Filing 
Delinquency will be cured via the filing or refiling of the applicable 
report, as the case may be. If the company has not issued the required 
press release within five days of the date of the Filing Delinquency 
Notification, the Exchange will issue a press release stating that the 
company has incurred a Filing Delinquency and providing a description 
thereof.
    During the six-month period from the date of the Filing Delinquency 
(the ``Initial Cure Period''), the Exchange will monitor the company 
and the status of the Delinquent Report and any Subsequent Reports, 
including through contact with the company, until the Filing 
Delinquency is cured.\9\ If the company fails to cure the Filing 
Delinquency within the Initial Cure Period, the Exchange may, in its 
sole discretion, allow the company's securities to be traded for up to 
an additional six-month period (the ``Additional Cure Period'') 
depending on the company's specific circumstances. If the Exchange 
determines that an Additional Cure Period is not appropriate, 
suspension and delisting procedures will commence in accordance with 
the procedures set out in Section 1010 of the Company Guide. A company 
is not eligible to follow the procedures outlined in Section 1009 with 
respect to these criteria. Notwithstanding the foregoing, however, the 
Exchange may in its sole discretion decide (i) not to afford a company 
any Initial Cure Period or Additional Cure Period, as the case may be, 
at all or (ii) at any time during the Initial Cure Period or Additional 
Cure Period, to truncate the Initial Cure Period or Additional Cure 
Period, as the case may be, and immediately commence suspension and 
delisting procedures if the company is subject to delisting pursuant to 
any other provision of the company Guide, including if the Exchange 
believes, in the Exchange's sole discretion, that continued listing and 
trading of a company's securities on the Exchange is inadvisable or 
unwarranted in accordance with Sections 1001-1006 of the Company Guide.
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    \9\ Under the proposed rule, a company that has an uncured 
Filing Delinquency would not incur an additional Filing Delinquency 
if it fails to file a Subsequent Report by the applicable Filing Due 
Date. However, in order for the company to cure its initial Filing 
Delinquency, no Subsequent Report may be delinquent or deficient on 
the date by which the initial Filing Delinquency is required to be 
cured.
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    The Exchange may also commence suspension and delisting procedures 
without affording any cure period at all or at any time during the 
Initial Cure Period or Additional Cure Period if the Exchange believes, 
in the Exchange's sole discretion, that it is advisable to do so on the 
basis of an analysis of all relevant factors, including but not limited 
to:
     Whether there are allegations of financial fraud or other 
illegality in relation to the company's financial reporting;
     the resignation or termination by the company of the 
company's independent auditor due to a disagreement;
     any extended delay in appointing a new independent auditor 
after a prior auditor's resignation or termination;
     the resignation of members of the company's audit 
committee or other directors;
     the resignation or termination of the company's chief 
executive officer, chief financial officer or other key senior 
executives;
     any evidence that it may be impossible for the company to 
cure its Filing Delinquency within the cure periods otherwise available 
under this rule; and any past history of late filings.
    In determining whether an Additional Cure Period after the 
expiration of the Initial Cure Period is appropriate, the Exchange will 
consider the likelihood that the Delinquent Report and all Subsequent 
Reports can be filed or refiled, as applicable, during the Additional 
Cure Period, as well as the company's general financial status, based 
on information provided by a variety of sources, including the company, 
its audit committee, its outside auditors, the staff of the SEC and any 
other regulatory body. The Exchange strongly encourages companies to 
provide ongoing disclosure on the status of the Delinquent Report and 
any Subsequent Reports to the market through press releases, and will 
also take the frequency and detail of such information into account in 
determining whether an Additional Cure Period is appropriate. If the 
Exchange determines that an Additional Cure Period is appropriate and 
the company fails to file the Delinquent Report and all Subsequent 
Reports by the end of such

[[Page 22173]]

Additional Cure Period, suspension and delisting procedures will 
commence immediately in accordance with the procedures set out in 
Section 1010. In no event will the Exchange continue to trade a 
company's securities if that company (i) has failed to cure its Filing 
Delinquency or (ii) is not current with all Subsequent Reports, on the 
date that is twelve months after the company's initial Filing 
Delinquency.
    The Exchange proposes that the proposed amendments will become 
operative immediately upon approval by the SEC. Any company that is 
delayed in making a filing that would be subject to proposed Section 
1007 will continue to be subject to the compliance plan provisions of 
Section l009 in relation to that delayed filing but will be subject to 
proposed Section 1007 in relation to any subsequent delayed filings.
    The Exchange proposes to include a cross-reference to proposed 
Section 1007 in Section 1101 of the Company Guide, which discusses SEC 
filing obligations of listed companies. The Exchange also proposes to 
remove a reference to a company's Listing Qualifications analyst in 
Section 1101 and replace it with a reference to Exchange staff, as the 
Exchange no longer has a department under the Listings Qualification 
title.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \10\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\11\ in particular in that it 
is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest 
and is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. The Exchange believes that the proposed 
amendment is consistent with the investor protection objectives of 
Section 6(b)(5) because: (i) It strengthens the Exchange's continued 
listing requirements with respect to delinquent SEC filings by deeming 
companies delinquent if they fail to file their annual report or Form 
10-Q on a timely basis and by subjecting companies to the late filer 
process if there are material inadequacies in their required annual or 
quarterly filings; and (ii) the more stringent requirements will 
encourage listed companies to submit timely and compliant periodic 
reports to the SEC.\12\
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ The amended procedures in relation to delayed periodic 
reports are more stringent than those currently in effect primarily 
because proposed Section 1007 would allow a company to remain listed 
for a maximum of 12 months from the filing due date of a delayed 
periodic report, while current rules give the Exchange the 
discretion to continue the listing for a period of up to 18 months.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed amendments to the Company 
Guide do not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The proposed 
rule change does not affect competition in any way, but rather simply 
seeks to protect investors by insuring that companies cannot remain 
listed for any extended period of time without appropriately filing 
their required periodic financial reports with the SEC.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-NYSEMKT-2017-23 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-NYSEMKT-2017-23. 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 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; 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-NYSEMKT-2017-23, and should 
be submitted on or before June 2, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09607 Filed 5-11-17; 8:45 am]
 BILLING CODE 8011-01-P