LTSE's Immediate Rule Change Alters Statutory Disqualification Definitions
The Long-Term Stock Exchange's amended rules on statutory disqualifications take effect immediately, binding current and prospective members and associated persons.
On August 12, 2026, the Long-Term Stock Exchange, Inc. (LTSE) filed a proposed rule change with the Securities and Exchange Commission (Commission) under Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4. The notice, published in the Federal Register on August 25, 2026 (Vol. 91, No. 166, pp. 55652-55655), is identified as Release No. 34-106187, File No. SR-LTSE-2026-17, and is effective immediately.
The amendment to LTSE Rule 1.160(cc) expands the definition of "person associated with a Member" to include natural persons who are registered, have applied for registration, or hold positions such as sole proprietor, partner, officer, director, or branch manager of a Member, mirroring Cboe BZX Exchange's Rule 1.5(q). This change eliminates the prior inclusion of entities under common control, aligning LTSE's definition with FINRA's.
LTSE Rule 2.160(a) is revised from an absolute prohibition on membership to language allowing the Exchange to "determine not to permit" a person to become or continue as a Member or associated person. The revision adds discretionary grounds, including failure to meet qualification requirements, non-compliance with Exchange conditions, and violation of agreements. Relief from statutory disqualification will now be sought under LTSE Rule Series 9.520 rather than a Commission order, consistent with BZX Rule 2.5(a) and 2.5(b).
Rule Series 9.521(a) is updated to clarify that eligibility proceedings apply to existing Members, prospective Members, and persons associated with a Member. Rule 9.521(b) adds that FINRA's Form MC-400A may be used for Member applicants and that applications may be filed with a designee, including FINRA. These textual changes are intended to harmonize LTSE procedures with those of other national securities exchanges.
The full text of the proposed rule change is available on the LTSE website, at the Exchange's principal office, and in the Commission's Public Reference Room.
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