Cboe EDGA aligns statutory disqualification rules with FINRA
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This rule change updates how Cboe EDGA handles exchange members and associated individuals who are barred or restricted under securities laws. It largely aligns EDGA’s process with FINRA and other exchanges, including when firms must file applications, when a supervisory plan may be used, and when SEC notice is needed. Broker-dealers that are EDGA members should see a more consistent process if they also deal with FINRA or other exchanges. Compliance teams should review the new Rule 2.13 and statutory disqualification circular, because some cases that previously required an EDGA application may now follow a lighter or different process.
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Key Changes
- Creates a new Rule 2.13 setting procedures for EDGA members and associated persons subject to statutory disqualification
- Aligns EDGA’s eligibility process more closely with FINRA and other exchanges to reduce inconsistent outcomes
- Allows some matters to be resolved through written relief requests or supervisory plans instead of full applications
Obligations
What this law requires
An EDGA Member or associated person that becomes subject to a statutory disqualification and seeks to continue as a Member or in association with a Member must submit the required request or application to the Exchange under Rule 2.13 and the Statutory Disqualification Circular, unless the SD Circular permits relief without an application.
A sponsoring Member must file an application to initiate an eligibility proceeding when it seeks to associate with, or continue associating with, a person subject to a statutory disqualification and an application is required under Rule 2.13 or the SD Circular.
If Exchange staff determines that a statutory disqualification application is substantially incomplete, the applicant must remedy the deficiencies in a timely manner or the application may be rejected.
If Exchange staff rejects an application because deficiencies were not remedied, the sponsoring Member must promptly terminate association with the disqualified person.
During the eligibility application process, a Member seeking to continue associating with a disqualified person may need to implement an interim plan of heightened supervision as required under Rule 2.13(b)(6).