Cboe C2 aligns statutory disqualification procedures with FINRA rules
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Cboe C2 Exchange is changing how it handles Trading Permit Holders and associated individuals who are barred or restricted under securities law because of a statutory disqualification. The new rule largely aligns C2’s process with FINRA’s eligibility procedures and common industry practice, reducing cases where the same firm faces different filing or notice requirements across regulators. The change mainly affects Cboe C2 Trading Permit Holders, firms applying to become permit holders, and associated persons with disciplinary or regulatory histories. Compliance teams should review the new Statutory Disqualification Circular, because whether an application or written request is needed will depend on the type and timing of the disqualification and whether the person or firm is entering, re-entering, or continuing in the securities industry.
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Key Changes
- Aligns Cboe C2’s statutory disqualification process with FINRA eligibility procedures and similar exchange rules
- Creates a Statutory Disqualification Circular that explains when an application or written request is required
- Lets exchange staff approve certain requests or supervisory plans without the older three-member hearing panel process
Obligations
What this law requires
A Trading Permit Holder must file an application with Cboe C2 to initiate an eligibility proceeding when the TPH or an associated person is subject to a statutory disqualification requiring an application under Rule 3.5 and the Statutory Disqualification Circular.
A disqualified TPH, sponsoring TPH, or disqualified associated person seeking relief without filing an application must submit a written request where the Statutory Disqualification Circular and Rule 3.5 allow Exchange staff to approve relief without an application.
If Exchange staff determines an application is substantially incomplete, the applicant must remedy the deficiencies within the time required by Rule 3.5 or the application may be rejected.
If Exchange staff rejects an application because deficiencies were not timely remedied, the sponsoring TPH must promptly terminate association with the disqualified person.
During the eligibility application process for a disqualified person, the sponsoring TPH must implement any required interim plan of heightened supervision under proposed Rule 3.5(b)(6).