Cboe C2 Refines Disqualification Rules for Traders
Published Date: 5/11/2026
Notice
Summary
Cboe C2 Exchange is updating its rules for Trading Permit Holders and their associates who face legal disqualifications. This change makes sure the rules match federal standards and helps keep trading fair and safe. The new rules take effect immediately, so affected traders should pay close attention to stay in the game without any hiccups.
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Analyzed Economic Effects
6 provisions identified: 2 benefits, 3 costs, 1 mixed.
10-Day Filing Deadline — Risk of Revocation
Under the proposed rule, a TPH must file an application within 10 days of becoming subject to a statutory disqualification. If the TPH fails to file within the 10-day period, the registration of the disqualified person shall be revoked and the sponsoring TPH must promptly terminate association with that person.
Rules Harmonize With FINRA Standards
If you are a Trading Permit Holder (TPH) or an associated person of a TPH, the Exchange changed Rule 3.5 to conform largely to FINRA's Rule Series 9520 and to use a Statutory Disqualification Circular. The Exchange says this harmonization will prevent different outcomes for firms that are members of both the Exchange and FINRA and reduce duplicative compliance for dual members.
Rule Change Is Immediately Operative
The Commission waived the usual 30-day operative delay and designated the proposed rule change as operative upon filing on May 4, 2026. If you are an affected TPH or associated person, the revised procedures and obligations described in the filing are effective immediately.
Interim Heightened Supervision for Associates
The proposed Rule 3.5(b)(6) allows the Exchange to implement an interim plan of heightened supervision for an associated person during the application process; plans of heightened supervision are issued solely for associated persons (not for TPHs).
Staff Can Grant Relief Without Application
Exchange staff may approve a written request for relief without the filing of an application in certain circumstances, for example if the disqualified TPH is a member of both the Exchange and another SRO and the other SRO intends to file a 19h-1 Notice and the Exchange staff concurs. The staff may also approve applications after filing for disqualifications arising solely from findings or orders specified in Section 15(b)(4)(D), (E), or (H) of the Act or under Section 3(a)(39)(E).
New and Modified Legal Definitions
The Exchange will add definitions in proposed Rule 3.5 (including 'Application,' 'disqualified TPH,' 'disqualified person,' 'sponsoring TPH,' and 'Exchange staff') and will adopt a definition of 'associated person' in Rule 1.1 similar to Nasdaq and IEX but without certain subparts (e.g., references to investment banking and a subpoint relating to another exchange rule).
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