Notice2026-04505
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt a Rule Codifying the Exchange's Fingerprint-Based Background Check Process
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 9, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 45 (Monday, March 9, 2026)</title>
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[Federal Register Volume 91, Number 45 (Monday, March 9, 2026)]
[Notices]
[Pages 11368-11371]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-04505]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104928; File No. SR-MEMX-2026-06]
Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Adopt a Rule
Codifying the Exchange's Fingerprint-Based Background Check Process
March 4, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 19, 2026, MEMX LLC (``MEMX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared by the Exchange. The Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is filing with the Commission a proposal to adopt a
rule codifying its current practice of conducting fingerprint-based
background checks of prospective and current partners, directors,
officers, and employees of the Exchange. The proposed rule would bring
the Exchange's rule in line with the rules of other exchanges,
including the New York Stock Exchange (``NYSE'') and its affiliates,\5\
with respect to fingerprinting of prospective and current partners,
[[Page 11369]]
directors, officers, and employees of the Exchange. The text of the
proposed rule change is provided in Exhibit 5 and is available on the
Exchange's website at <a href="https://info.memxtrading.com/regulation/rules-and-filings/">https://info.memxtrading.com/regulation/rules-and-filings/</a>.
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\5\ See NYSE Rule 28, Fingerprint-Based Background Checks of
Exchange Employees and Others. See also NYSE Arca, Inc. (``NYSE
Arca'') Rule 3.11, NYSE National, Inc. (``NYSE National'') Rule
3.11, NYSE Texas, Inc. (``NYSE Texas'') Rule 3.11, and NYSE
American, LLC (``NYSE American'') Rule 3.11E, which are all
substantively identical to NYSE Rule 28.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes a new Rule 13.9 codifying the current
practice of conducting fingerprint-based background checks of
prospective and current partners, directors, officers and employees of
the Exchange. The proposed rule would be in line with the rules of NYSE
and its affiliates \6\ with respect to fingerprinting current and
prospective and current partners, directors, officers, and employees of
the Exchange. A number of other securities markets have also adopted a
similar rule, permitting them to obtain fingerprints from certain
enumerated parties.\7\ The proposed rule is also consistent with those
rules.
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\6\ See supra note 3 [sic].
\7\ See, e.g., Cboe Rule 7.10; BOX Exchange LLC (``BOX'') Rule
10080; Nasdaq Stock Market (``Nasdaq'') General 2, Section 13.
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Section 17(f)(2) of the Securities Exchange Act of 1934 (the
``Act''), as amended by the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (``Dodd-Frank Act''),\8\ provides that every
member of a national securities exchange, broker, dealer, registered
transfer agent, registered clearing agency, registered securities
information processors, national securities exchanges and national
securities associations shall require each of its partners, directors,
officers and employees of to be fingerprinted and submit those
fingerprints (or cause the fingerprints to be submitted) to the
Attorney General of the United States (``Attorney General'') for
identification. Section 17(f)(2) explicitly directs the Attorney
General to provide self-regulatory organizations (``SROs'') designated
by the Commission with access to criminal history record information.
Further, Section 17(f)(2) authorizes SROs to store criminal record
information received from the Federal Bureau of Investigation
(``FBI''), which maintains on behalf of the Attorney General a database
of fingerprint-based criminal history records.\9\
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\8\ See 15 U.S.C. 78q(f)(2); Dodd-Frank Act Sect. 929S.
\9\ See 17 CFR 240.17f-2(d).
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Consistent with these requirements, proposed Rule 13.9 would
require the Exchange to obtain fingerprints of prospective and current
partners, directors, officers and employees of the Exchange; submit
those fingerprints to the Attorney General or his or her designee for
identification and processing; and receive criminal history record
information from the Attorney General for evaluation and use, in
accordance with applicable law, in enhancing the security of the
facilities, systems, data, and/or records of the Exchange.\10\
Additionally, pursuant to the proposed rule, the Exchange may determine
not to obtain fingerprints from, or to seek fingerprint-based
background information with respect to, a person due that person's
limited, supervised, or restricted access to facilities and records; or
the nature or location of his or her work or services.\11\
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\10\ As seen in proposed Rule 13.9(a), the facilities, systems,
data and/or records of the Exchange and its affiliates are
collectively termed ``facilities and records''.
\11\ Specifically, the Exchange has not conducted fingerprint-
based background checks of certain directors given that they do not
have any unsupervised access to the Exchange's facilities and
records.
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The Exchange would utilize a Live-Scan \12\ electronic system to
capture and transmit fingerprints directly to the FBI. The capture and
transmittal function, and corresponding receipt of criminal history
information from the FBI, would be handled directly by Exchange
personnel and/or an FBI-approved ``Channel Partner'' \13\ who would
maintain and operate, on behalf of the Exchange, a Live-Scan and/or
other electronic system(s) for the submission of fingerprints to the
FBI; receive and maintain criminal history record information from the
FBI; and disseminate such information, through secure systems, to a
limited set of approved reviewing officials within the Exchange and its
affiliates.
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\12\ Live-Scan refers to the process of capturing fingerprints
directly into a digitized format as opposed to traditional ink and
paper methods. Live-Scan technology captures and transfers images to
a central location and/or interface for identification processing.
\13\ FBI-approved Channel Partners receive the fingerprint
submission and relevant data, collect the associated fee(s),
electronically forward the fingerprint submission with the necessary
information to the FBI Criminal Justice Information Services
Division (``CJIS'') for a national Criminal History Summary check,
and receive the electronic summary check result for dissemination to
the authorized employer entity. See Securities Exchange Act Release
No. 71066 (December 12, 2013), 78 FR 76667 (December 18, 2013) (SR-
ISE-2013-66). The Exchange would retain ultimate legal
responsibility for the fulfillment of its statutory and self-
regulatory obligations under the Act, including compliance with
Section 17(f)(2) of the Act as amended by the Dodd-Frank Act.
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Fingerprint-based background checks would enhance the ability to
screen employees and non-employees adequately to determine better, in
accordance with applicable law, whether there are unacceptable risks
associated with granting such persons access to facilities and records.
Through access to state-of-the-art information systems administered and
maintained by the FBI, the Exchange would receive centrally-maintained
``criminal history record information,'' which includes arrest-based
data and derivative information, and may include personal descriptive
data; FBI number; conviction status; sentencing, probation and parole
information; and such other information as the FBI may make available.
This information is supplied to the FBI by various local, state,
federal and/or international criminal justice agencies. The information
obtained through fingerprint-based background checks would thus provide
a more exhaustive and reliable profile of a candidate's criminal
record, and thereby better facilitate risk assessment, than a physical
review of court records based on information provided by the candidate.
The proposed access to criminal history information is consistent
with federal law. As noted, Section 17(f)(2) was amended by the Dodd-
Frank Act to also require partners, directors, officers and employees
of registered securities information processors, national securities
exchanges and national securities associations to be fingerprinted.
Although Section 17(f)(2) does not require the fingerprinting of
contractors or other temporary personnel, the statute specifically
permits SROs designated by the SEC to have access to ``all criminal
history record information.'' As such, in order to still safeguard the
security of the facilities, systems, data and information of the
Exchange, it is also proposing to adopt Rule 13.9, Interpretation and
Policy .01, which provides that the Exchange will engage a third party
to
[[Page 11370]]
conduct a background screening of all prospective and current temporary
personnel, independent contractors and service providers who may or may
be permitted to have unsupervised access to facilities and records and
the Exchange shall utilize the information obtained from such
screenings in making employment decisions.\14\ The Exchange believes
such a practice further enhances its ability to assess whether there
are unacceptable risks associated with granting such persons
unsupervised access to facilities and records.
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\14\ The background screening shall include, among other things,
education verification, a criminal background check, and drug
screening panel.
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Based on the foregoing, the Exchange believes that fingerprint-
based background checks of partners, directors, officers and employees
would promote the objectives of investor protection, business
continuity and workplace safety by providing the Exchange with an
effective tool for identifying and excluding persons with felony or
misdemeanor conviction records that may pose a threat to the safety of
Exchange personnel or the security of facilities and records.
The Exchange will comply with all applicable laws relating to the
use and dissemination of criminal history record information obtained
from the FBI.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act,\15\ in general, and furthers the objectives of Section
6(b)(5),\16\ in particular, because it is designed to prevent
fraudulent and manipulative acts and practices, promote just and
equitable principles of trade, remove impediments to and perfect the
mechanism of a free and open market and a national market system, and
protect investors and the public interest.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes fingerprint-based background
checks of partners, directors, officers, and employees is consistent
with the Section 6(b)(5) requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest in that they would help identify and exclude persons with
felony or misdemeanor conviction records that may pose a threat to the
safety of Exchange personnel or the security of facilities and records,
thereby enhancing business continuity, workplace safety and the
security of the Exchange's operations and helping to protect investors
and the public interest. The proposed rule brings the Exchange's rule
in line with the rules of NYSE and its affiliated exchanges,\17\ and
the fingerprinting rules of other SROs.\18\ The proposed amendment
would also conform the Exchange's fingerprinting practices with Section
17(f)(2) of the Act.
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\17\ See supra note 3 [sic].
\18\ See supra note 7.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not intended to address competitive issues but rather to enhance the
security and continuity of the Exchange's facilities and records by
adopting a fingerprinting rule that codifies the Exchange's current
practice in compliance with Section 17(f)(2) of the Act as amended by
the Dodd-Frank Act. As discussed above, the Exchange notes that the
proposed rule change is based on the fingerprinting rules of other
SROs.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \19\ and Rule 19b-4(f)(6) thereunder.\20\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \21\ and Rule 19b-
4(f)(6)(iii) thereunder.\22\
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\19\ 15 U.S.C. 78s(b)(3)(A)(iii).
\20\ 17 CFR 240.19b-4(f)(6).
\21\ 15 U.S.C. 78s(b)(3)(A).
\22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \23\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\24\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested the Commission waive the operative delay. The Exchange states
that the proposed rule change would help the Exchange identify and
exclude persons with felony or misdemeanor conviction records that may
pose a threat to the safety of Exchange personnel or the security of
facilities and records, thereby enhancing business continuity,
workplace safety and the security of the Exchange's operations. In
addition, the proposed rule would align the rules of the Exchange with
the rules of other exchanges with respect to fingerprinting current and
prospective and current partners, directors, officers, and employees of
the Exchange. For these reasons, and because the proposed rule change
does not raise any new or novel regulatory issues, the Commission finds
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposed rule change as operative upon filing.\25\
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\23\ 17 CFR 240.19b-4(f)(6).
\24\ 17 CFR 240.19b-4(f)(6)(iii).
\25\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing,
[[Page 11371]]
including whether the proposed rule change is consistent with the Act.
Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#fa888f969fd7999597979f948e89ba899f99d49d958c"><span class="__cf_email__" data-cfemail="3f4d4a535a125c5052525a514b4c7f4c5a5c11585049">[email protected]</span></a>. Please include
file number SR-MEMX-2026-06 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-MEMX-2026-06. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the filing will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to file number SR-MEMX-2026-06 and should be submitted on
or before March 30, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-04505 Filed 3-6-26; 8:45 am]
BILLING CODE 8011-01-P
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