Cboe BYX Syncs Rules on Banned Traders with FINRA Standards
Published Date: 5/13/2026
Notice
Summary
Cboe BYX Exchange is updating its rules about members or their associates who face legal disqualifications, making sure the rules match those of FINRA with a few tweaks. This change affects anyone involved with the Exchange who might be barred from trading due to legal issues. The new rules take effect immediately, helping keep the market safe and fair without causing delays or extra costs.
Analyzed Economic Effects
6 provisions identified: 4 benefits, 2 costs, 0 mixed.
Fewer SD applications for resolved disqualifications
The Exchange changed its rules to conform to FINRA and will no longer require Members or associated persons to submit Statutory Disqualification (SD) applications for prior statutory disqualifications that have been resolved. The Exchange will incorporate an SD Circular that explains when an application is required based on the type and date of the disqualification and whether the person seeks admission, readmission, or continuation.
Harmonized rules for dual FINRA/Exchange members
The Exchange substantially aligned its statutory-disqualification procedures with FINRA Rule Series 9520 so that firms that are members of both FINRA and the Exchange will face fewer conflicting outcomes. The Exchange said this harmonization will result in less burdensome and more efficient regulatory compliance for dual members.
Fewer 19h-1 Notices required in certain cases
The Exchange will rely on FINRA's 2009 No-Action Letter and related interpretations in deciding when an Exchange Act Rule 19h-1 notice to the SEC is required. The filing notes that FINRA's No-Action Letter ultimately requires fewer 19h-1 Notices to be filed in certain circumstances (for example, where a CFTC willful violation’s sanctions are no longer in effect).
Affiliates under common control may still need Exchange filings
The Exchange's proposed definition of "associated person" includes affiliates under common control for the purpose of statutory disqualifications, which means a Member with an affiliate under common control that becomes disqualified must file an application with the Exchange even if FINRA would not require one. The filing explicitly notes that a firm that is both an Exchange Member and FINRA member with such an affiliate is required to file with the Exchange but not with FINRA.
Rule change became operative immediately
The SEC waived the normal 30-day operative delay and designated the Exchange's proposed rule change as operative upon filing. The Exchange filed the proposal on May 6, 2026, so the rule became operative upon that filing date.
Exchange uses its own SD application fee program
The Exchange will not adopt FINRA's application-fee language and instead will apply its own SD application fee program as reflected in the Exchange's fee schedule. The Exchange notes FINRA's rules reference FINRA's fee and refund approach, but the Exchange proposes to rely on its separate fee program.
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