Notice2026-09256
Self-Regulatory Organizations; MX2 LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2.8, Voluntary Termination of Rights as a Member
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
May 11, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 90 (Monday, May 11, 2026)</title>
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[Federal Register Volume 91, Number 90 (Monday, May 11, 2026)]
[Notices]
[Pages 25723-25726]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-09256]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105381; File No. SR-MX2-2026-01]
Self-Regulatory Organizations; MX2 LLC; Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Amend Rule 2.8,
Voluntary Termination of Rights as a Member
May 6, 2026.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on April 29, 2026, MX2 LLC (``MX2'' or the ``Exchange'') filed
with the Securities
[[Page 25724]]
and Exchange Commission (the ``Commission'') the proposed rule change
as described in Items I, II, and III 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).
\4\ 17 CFR 240.19b-4.
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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 proposed rule change
to amend Rule 2.8, Voluntary Termination of Rights as a Member, to
simplify the manner in which a Member may voluntarily terminate its
membership with 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>.
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 to amend Rule 2.8 (Voluntary Termination of
Rights as. Member) to simplify the manner in which a Member may
voluntarily terminate its membership with the Exchange. Specifically,
as described below, the Exchange proposes to remove the conditions
related to completion of investigations and examinations to avoid
unnecessary delay of voluntary termination requests.\5\
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\5\ The Exchange notes its affiliate Exchange, MEMX, LLC
(``MEMX'') submitted (or will submit) a substantively similar
proposal.
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Under current Exchange Rule 2.8, a Member's voluntary termination
of membership will not be effective until 30 days after the terminating
Member has: (i) provided a written resignation; (ii) paid in full all
indebtedness owed to the Exchange; (iii); there is a final disposition
of any investigation or disciplinary action against the Member; and
(iv) any examination of the Member has been completed and all
exceptions resolved.\6\
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\6\ MX2 Rule 2.8 also authorizes the Board to declare a
resignation effective at any earlier time.
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The Exchange believes that these requirements are unnecessarily
burdensome to both MX2 and a terminating Member. Specifically, the
requirement that investigations and examinations be completed before a
voluntary termination may take effect can result in significant delay
in effectuating a membership termination, even though some of the
investigations and examinations will not ultimately result in a
conclusion that the Member violated applicable MX2 Rules.\7\
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\7\ The examinations that FINRA conducts on behalf of MX2 are
typically routine ``cycle'' examinations that are not prompted by
potential violative activity by the firm but may nevertheless take
several months to complete. In such circumstances, examinations can
delay termination.
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The Exchange believes that Rule 2.8, as amended, will facilitate a
more efficient voluntary termination process, in which a Member may
voluntarily terminate its Member status and cease being subject to
Member obligations notwithstanding any ongoing disciplinary proceedings
or examinations, given that the Exchange, through Rule 8.1(b) retains
disciplinary jurisdiction over the Member following such voluntary
termination.\8\ The proposed amendments will streamline the voluntary
termination process by removing conditions that have the potential to
unnecessarily prolong unwanted obligations of membership, including for
example, filing annual reports with the Exchange through FINRA \9\ and
maintaining certain books and records.\10\ As discussed below, the
Exchange does not believe it is necessary to delay a membership
termination until any pending investigations, disciplinary proceedings,
or examinations have reached a final disposition or are completed and
all exceptions have been reasonably resolved because MX2 retains
jurisdiction over a terminated member or associated person and may
initiate inquiries within one year of receipt of the latest written
notice of termination. MX2 believes this is an adequate time frame to
determine whether potentially violative conduct may have occurred prior
to termination.
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\8\ Specially, Rule 8.1(b) states in relevant part: ``Any Member
or person associated with a Member shall continue to be subject to
the disciplinary jurisdiction of the Exchange following the
termination of such person's membership or association with a Member
with respect to matters that occurred prior to such termination;
provided that written notice of the commencement of an inquiry into
such matters is given by the Exchange to such former Member or
former associated person within one year of receipt by the Exchange
of the latest written notice of the termination of such person's
status as a Member or person associated with a Member.''
\9\ See 17 CFR 240.17a-5.
\10\ See MX2 Rule 4.1.
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Accordingly, the Exchange proposes to amend Rule 2.8 to remove the
conditions set forth in Rule 2.8(iii) (the requirement that any
Exchange investigation or disciplinary action brought against the
Member has reached a final disposition) and (iv) (the requirement that
any examination by the Exchange of such Member is completed and all
exceptions noted have been reasonably resolved). As proposed, amended
Rule 2.8 would require that a Member's voluntary termination would not
be effective until a Member has provided written notice of resignation
to the Exchange (current Rule 2.8(i)), completed any outstanding
filings required under the Rules, and paid any outstanding fees,
assessments, charges, fines, or other amounts due to the Exchange, the
Commission, or the Securities Investor Protection Corporation
(``SIPC''). The proposed change would expand current Rule 2.8(ii),
which requires all indebtedness due the Exchange be paid in full, to
also cover all outstanding fees, assessments, charges, fines, or other
amounts due to the Exchange, the Commission or SIPC to ensure that a
Member has complied with these important financial obligations before a
termination may take effect.
The Exchange also proposes to remove the rule text in Rule 2.8
providing that a voluntary termination will not take effect until 30
days after the Member has satisfied the stated conditions. The Exchange
believes this 30 day waiting period is unnecessary because the Exchange
will be able to promptly verify whether the terminating Member has
satisfied the criteria to terminate.
In addition, as proposed, amended Rule 2.8 will require, as a
condition of voluntary termination, that the Member make any
outstanding filings required under the Exchange's Rules. The Exchange
believes this amendment is
[[Page 25725]]
appropriate because, to the extent a Member voluntarily terminating its
membership is delinquent in any filings required by MX2 Rules or FINRA
rules incorporated by reference, this condition will ensure that the
Member comes into compliance on required filings before the termination
takes effect. This provision is substantially identical to the
voluntary termination rules of Cboe BZX Exchange (``BZX'') and IEX.\11\
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\11\ See, e.g., BZX Rule 2.8 and IEX Rule 2.190.
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The Exchange also proposes to remove the proviso at the end of Rule
2.8 that the Board may declare a Member's resignation effective at any
earlier time. In light of the proposed amendments, the Exchange does
not expect there will be extended delays in the effectiveness of a
membership termination and accordingly there is no compelling reason
for the conditions in the proposed rule amendments to be subject to
override by the Board. Furthermore, the other exchanges with similar
rules do not include such a provision.\12\ Therefore, the Exchange
proposes removing this rule text from the amended rule.
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\12\ Id.
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Finally, the Exchange proposes amending the first sentence of Rule
2.8 to remove the terms ``only'' and ``addressed'' because they are
unnecessarily duplicative and replacing the second sentence with ``(a)
made any outstanding filings required under the Rules; and (b) paid any
outstanding fees, assessments, charges, fines, or other amounts due to
the Exchange, the Commission or the Securities Investor Protection
Corporation.''
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.\13\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \14\ 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
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, 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.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \15\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The Exchange also believes the
proposed rule change is consistent with Section 6(b)(1) of the Act,\16\
which provides that the Exchange be organized and have the capacity to
be able to carry out the purposes of the Act and to enforce compliance
by the Exchange's Members and persons associated with its Members with
the Act, the rules and regulations thereunder, and the rules of the
Exchange.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(5).
\15\ Id.
\16\ 15 U.S.C. 78f(b)(1).
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In particular, the Exchange believes the proposed amendments to the
conditional requirements for voluntary termination of Membership will
make the termination process more efficient by allowing Members to
terminate their Member status and therefore cease being subject to
Member obligations notwithstanding any ongoing disciplinary actions and
exams (which may continue for an indeterminate period of time), given
the Exchange maintains jurisdiction over a Member or person associated
with a Member following such termination for disciplinary matters under
Exchange Rules. The Exchange believes the proposed amendments result in
a termination process that allows for proper disciplinary jurisdiction
while also ensuring that termination is not unduly prolonged due to an
administrative technicality within the termination requirements, to the
benefit of investors and the public interest. Further, the Exchange
believes the proposed changes will serve to avoid wasting Member and
Exchange resources on maintaining memberships that are no longer
utilized, but unable to be terminated due to ongoing disciplinary
action or examination process.
As noted above, the Exchange continues to maintain disciplinary
jurisdiction over terminated firms following termination for matters
that occurred prior to termination, provided written notice of the
commencement of an inquiry into such matters is provided to the
terminated Member within one year of the Member's written notice of
termination. Therefore, the Exchange believes that the termination
requirements set forth in Rule 2.8(iii) and (iv) are unnecessarily
duplicative, given the Exchange maintains disciplinary jurisdiction
over terminated Members via Rule 8.1(b) with respect to matters that
occurred prior to such termination, thereby ensuring the Exchange may
continue to enforce compliance by the Exchange's Members and persons
associated with its Members with the Act, the rules and regulations
thereunder, and the rules of the Exchange. The proposed changes also
apply uniformly to all Members that may choose to voluntarily terminate
their membership. As noted above, multiple other exchanges also have
similar termination requirements as those proposed by the Exchange.\17\
As such, the proposed rule change would foster cooperation and
coordination with persons engaged in facilitating transactions in
securities and would remove impediments to and perfect the mechanism of
a free and open market and a national market system.
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\17\ See supra note 11.
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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. This proposal does not
create an unnecessary or inappropriate intra-market burden on
competition because the proposed change will apply uniformly to all
Members that choose to voluntarily terminate their membership. Further,
the proposed change is not designed to address any competitive issues.
Indeed, this proposal does not create an unnecessary or inappropriate
inter-market burden on competition because it merely amends the
requirements for voluntary termination of rights as a Member and
conforms to the rules of other exchanges.\18\ Finally, as noted above,
the Exchange believes the proposed rule amendments will not result in
any practical changes to the Exchange's disciplinary jurisdiction from
an Exchange or Member perspective, given the Exchange maintains
disciplinary jurisdiction over terminated Members following their
termination, subject to the provisions of Rule 8.1.
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\18\ Id.
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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.
[[Page 25726]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change is filed for immediate effectiveness
pursuant to Section 19(b)(3)(A) of Act \19\ and Rule 19b-4(f)(6) \20\
thereunder. Because the foregoing 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 for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \21\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\22\
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\19\ 15 U.S.C. 78s(b)(3)(A).
\20\ 17 CFR 240.19b-4(f)(6).
\21\ 15 U.S.C. 78s(b)(3)(A)(iii).
\22\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
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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At any time within 60 days of the filing of this 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. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, 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#c0b2b5aca5eda3afadada5aeb4b380b3a5a3eea7afb6"><span class="__cf_email__" data-cfemail="a1d3d4cdc48cc2ceccccc4cfd5d2e1d2c4c28fc6ced7">[email protected]</span></a>. Please include
file number SR-MX2-2026-01 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-MX2-2026-01. 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 also 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-MX2-2026-01 and should be submitted on
or before June 1, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2026-09256 Filed 5-8-26; 8:45 am]
BILLING CODE 8011-01-P
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