Cboe BZX Aligns Rules on Statutory Disqualifications
Published Date: 5/11/2026
Notice
Summary
Cboe BZX Exchange is updating its rules for members and their associates who face legal disqualifications, making sure their policies match industry standards like FINRA’s. This change affects anyone involved with the Exchange who might be barred from certain activities due to legal issues. The new rules take effect immediately, helping keep the market fair and trustworthy without any extra costs.
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Analyzed Economic Effects
6 provisions identified: 3 benefits, 2 costs, 1 mixed.
New 10-Day Filing Deadline
The proposed rule includes a 10-day period for a Member to file an application or, where appropriate, a written request for relief after a statutory disqualification; if the filing is not made within that 10-day period, the disqualified person's registration shall be revoked and the sponsoring Member must promptly terminate the association. This shortens the current 30-day reference in the Exchange's existing Rule 2.5(b).
Rules Harmonize with FINRA
The Exchange is changing its eligibility rules to conform largely to FINRA's Rule Series 9520 so members that belong to both the Exchange and FINRA face more similar procedures. This is intended to reduce inconsistent outcomes when FINRA reviews statutory disqualifications for firms that are members of both organizations.
No Application for Resolved Disqualifications
Under the proposed change, Members and associated persons will no longer need to file Statutory Disqualification Applications for prior statutory disqualifications that have already been resolved. This reduces the need to re-submit eligibility applications for past matters that are no longer active.
Affiliates Under Common Control Still Covered
The Exchange's adopted definition of 'associated person' for statutory disqualifications includes entities under common control, meaning a Member may need to file applications for affiliates under common control that are subject to statutory disqualification. FINRA's definition does not include such affiliates, so filing requirements may differ between the Exchange and FINRA.
Staff Can Approve Without Full Application
The Exchange staff may approve certain written requests for relief without the filing of a full application in specific circumstances. For example, staff may approve relief without an application if the disqualified party is a member of both the Exchange and another SRO and that other SRO intends to file a Rule 19h-1 notice and Exchange staff concurs.
Exchange Keeps Its Own Application Fee Practice
The Exchange states it will not adopt FINRA's rule language regarding FINRA's application fee refund practice and notes it has its own application fee program reflected in its fee schedule. Application fee treatment for Exchange filings will follow the Exchange's fee schedule rather than FINRA's refund framework.
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