Cboe EDGX aligns statutory disqualification procedures with FINRA rules
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Cboe EDGX is changing how it handles exchange members and associated individuals who are barred or restricted under securities-law disqualification rules. The exchange will adopt a new Rule 2.13 and revise Rule 2.5 so its process largely matches FINRA’s eligibility procedures and the approach used by other exchanges. The practical effect is a more consistent process for broker-dealers that are members of both FINRA and Cboe EDGX. Some firms or individuals may no longer need to file separate applications or SEC notices where FINRA’s process already provides relief, while others will follow clearer application, supervision-plan, and appeal procedures.
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Key Changes
- Creates new Rule 2.13 for eligibility proceedings involving statutory disqualifications
- Revises Rule 2.5 so members follow the new statutory disqualification procedures
- Aligns EDGX procedures more closely with FINRA and other exchange rules, reducing duplicative filings in some cases
Obligations
What this law requires
A Member or associated person that becomes subject to a statutory disqualification and seeks to continue as an Exchange Member or remain associated with a Member must submit a request to the Exchange within 30 days of becoming subject to the statutory disqualification.
A Member must file an application to initiate an eligibility proceeding when the Member or its associated person is subject to a statutory disqualification and relief is required under the Exchange’s statutory disqualification procedures and SD Circular.
A sponsoring Member must promptly terminate its association with a disqualified person if Exchange staff rejects the application as substantially incomplete after the applicant fails to remedy the deficiencies in a timely manner.
During the application process for a disqualified person, the Member must implement an interim plan of heightened supervision when required under proposed Rule 2.13(b)(6).
A disqualified Member, sponsoring Member, or disqualified person that consents to a proposed supervisory plan must execute a written consent letter and submit it to Exchange staff, thereby waiving appeal rights if the plan is accepted and waiving claims of bias, prejudgment, or prohibited ex parte communications.