Self-Regulatory Organizations: Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Certain of Its Rules Regarding Statutory Disqualifications

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<title>Federal Register, Volume 91 Issue 166 (Friday, August 28, 2026)</title>
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[Federal Register Volume 91, Number 166 (Friday, August 28, 2026)]
[Notices]
[Pages 55652-55655]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17550]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106187; File No. SR-LTSE-2026-17]


Self-Regulatory Organizations: Long-Term Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Certain of Its Rules Regarding Statutory Disqualifications

August 25, 2026.
    Pursuant to the provisions of Section 19(b)(1) under the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on August 12, 2026, Long-Term Stock Exchange, Inc. 
(``LTSE'' or ``Exchange'') filed with the Securities 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 
self-regulatory organization. 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.
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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 Securities and Exchange Commission 
(``Commission'') a proposed rule change to amend certain of its rules 
regarding statutory disqualifications.
    The text of the proposed rule change is available at the Exchange's 
website at <a href="https://ltse.com/regulation/rule-filings#rule-filings">https://ltse.com/regulation/rule-filings#rule-filings</a>, at 
the principal office of the Exchange, and at the Commission's Public 
Reference Room.

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 self-regulatory organization 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
    LTSE is amending certain of its rules regarding statutory 
disqualifications. First, the Exchange is supplementing Rule 1.160(cc) 
(defining ``person associated with a Member'' or ``associated person of 
a Member'') by adding the following text:

    For purposes of ``statutory disqualification'' as such term is 
defined in Section 3(a)(39) of the Exchange Act, the terms ``person 
associated with a Member'' and ``associated person of a Member'' 
shall mean (1) a natural person who is registered or has applied for 
registration under the Rules of the Exchange and (2) a sole 
proprietor, partner, officer, director, or branch manager of a 
Member, or other natural person occupying a similar status or 
performing similar functions, or a natural person engaged in the 
securities business who is directly or indirectly controlling or 
controlled by a Member, whether or not any such person is registered 
or exempt from registration with the Exchange under its Rules.

This addition conforms LTSE's definition exactly to Cboe BZX Exchange, 
Inc. (``BZX'') Rule 1.5(q) and is designed to improve the interplay 
between the Exchange's rules and FINRA's.
    Prior to this proposed rule change, in all contexts, LTSE's 
definition included entities, meaning that an entity that is under 
common control of a Member is considered a person associated with the 
Member. Under the Exchange's rules, Members are required to submit an 
application for continuance as a Member if any person associated with 
the Member becomes subject to a statutory disqualification \3\ and so, 
prior to this proposal, Members were required to file applications for 
affiliates under common control that would be subject to a statutory 
disqualification under securities law. In contrast, FINRA's definition 
of ``Person Associated with a member'' or ``Associated Person of a 
Member'' does not include affiliates under common control of the FINRA 
member.\4\ Thus, prior to this proposed rule change, a firm that is 
both an Exchange Member and FINRA member, which has an affiliate under 
common control that would be subject to a statutory disqualification 
under securities laws, was required to file an application with the 
Exchange but not with FINRA. By altering LTSE's definition of ``Person 
Associated with a member'' or ``Associated Person of a Member'' in the 
context of statutory disqualification, LTSE harmonized the outcomes 
under its rules and FINRA's (such that, in the described scenario, the 
member of FINRA and LTSE would not be required to file).
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    \3\ See LTSE Rules 9.521(a) and 9.522.
    \4\ FINRA Regulation, Inc. By-laws, Article I, paragraph (ee) 
defines the terms ``person associated with a member'' or 
``associated person of a member'' in relevant part as: ``(2) a sole 
proprietor, partner, officer, director, or branch manager of a 
member, or other natural person occupying a similar status or 
performing similar functions, or a natural person engaged in the 
investment banking or securities business who is directly or 
indirectly controlling or controlled by a member, whether or not any 
such person is registered or exempt from registration with the 
Corporation under these By-Laws or the Rules of the Corporation; and 
(3) for purposes of Rule 8210, any other person listed in Schedule A 
of Form BD.''
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    The Exchange also proposes to amend LTSE Rule 2.160(a) in a number 
of ways. As context, LTSE Rule 2.160 governs registration requirements 
and restrictions on membership. Prior to the proposed rule change, the 
introductory language in Rule 2.160(a) provided: ``No person may become 
a Member or continue as a Member in any capacity on the Exchange where. 
. . .'' As amended, Rule 2.160(a) now provides: ``The Exchange may 
determine not to permit a person to become or continue as a Member or 
person associated with a Member in any capacity on the Exchange where. 
. . .'' Thus, the

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previous outright prohibition on becoming or remaining a Member was 
softened to allow the Exchange to prohibit membership based on the 
items enumerated below. This amended rule text also permits the 
Exchange to prohibit a person from becoming or continuing as a person 
associated with a Member, which had not been within the express scope 
of this provision. The Exchange notes that BZX Rule 2.5(a) is similarly 
permissive.\5\
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    \5\ Like the proposed rule, BZX Rule 2.5(a) explicitly permits 
the exchange to determine not to permit a person to become or 
continue as a Member or person associated with a Member.
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    The Exchange is amending LTSE Rule 2.160(a)(3) in two respects. 
First, the scope of this subparagraph is being broadened to conform to 
the revised scope to LTSE Rule 2.160(a) as discussed above. Second, the 
Exchange is permitting relief from statutory disqualification pursuant 
to the applicable requirements of LTSE Rule Series 9.520 rather than a 
Commission order pursuant to Rules 19d-1, 19d-2, 19d-3 and 19h-1 of the 
Act. The Exchange notes that this is consistent with BZX Rules 
2.5(a)(3) and 2.5(b).
    Additionally, the Exchange proposes the following new circumstances 
under which it may determine to not to permit a person to become a 
Member or person associated with a Member: failure to meet any of the 
qualification requirements for becoming a Member or associated with a 
Member; failure to meet any condition placed by the Exchange on such 
Member or association with a Member; and violation of any agreement 
with the Exchange.\6\ These conditions are not novel.\7\
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    \6\ See proposed LTSE Rule 2.160(a)(5), (6), and (7), 
respectively.
    \7\ See BZX Rule 2.5(a)(5), (6), and (7).
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    The Exchange also made changes to portions of its Rule Series 9.500 
(Other Proceedings), which governs LTSE's procedure for persons who are 
or are about to be aggrieved by adverse action, including, but not 
limited to, those persons who have been denied membership in the 
Exchange, barred from becoming associated with a Member, allowing them 
to apply for an opportunity to be heard and to have the complained of 
action reviewed. LTSE Rule 9.521(a) is not substantive; it provides an 
overview of the rules that follow. The Exchange made the following 
changes (additions italicized, deletion [bracketed]) to that paragraph:

    LTSE Rule Series 9.520 sets forth procedures for a person to 
become or remain a Member or associated with a Member, 
notwithstanding the existence of a statutory disqualification as 
defined in Article I of the LTSE Bylaws and for a current Member 
[or], person currently associated with a Member, Member applicant, 
or person seeking to become associated with a Member to obtain 
relief from the eligibility or qualification requirements of the 
LTSE Bylaws and LTSE Rules. Such actions hereinafter are referred to 
as ``eligibility proceedings.''

    The additions of ``a Member'', ``Member applicant'' and ``person 
seeking to become associated with a Member'' are clarifying changes 
designed to better describe the scope of LTSE Rule Series 9.520 both 
prior to and after this proposed rule change. Proposed LTSE Rule 
9.521(a) expressly states that eligibility proceedings apply to 
existing and prospective Members as well as persons associated with a 
Member and persons seeking such association. This is consistent with 
LTSE Rule 9.522(a)(1) for example, which was not changed and sets forth 
the procedure to be followed when LTSE Regulation staff (or FINRA 
staff) has reason to believe that a disqualification exists or that a 
Member, person associated with a Member, applicant to become a Member, 
or applicant to become associated with a Member, fails to meet LTSE's 
eligibility requirements.\8\
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    \8\ The Exchange believes that proposed LTSE Rule 9.521(a) 
describes the scope of its rules more comprehensively than overviews 
provided by other national securities exchanges. Compare IEX Rules 
9.521(a) (which does not expressly state that the procedures apply 
to prospective Members) and 9.522(a)(1) (which states that the 
procedure applies to prospective Members).
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    The Exchange made changes to LTSE Rule 9.521(b). Specifically, it 
added detail to the definition of ``Application'' by stating that 
FINRA's Form MC-400A is applicable to Member applicants (in addition to 
Members), and provided that an Application may be filed with a 
designee, which may include FINRA (in addition to the Department of 
Registration and Disclosure). As amended, LTSE Rule 9.521(b)(1) is 
substantially similar to BZX Rule 2.13(a)(2)(A).
    The Exchange also defined a new term ``LTSE Regulation'' as 
follows: ``certain Exchange employees and, as applicable, may also 
include employees of FINRA who are providing regulatory services to the 
Exchange in accordance with the regulatory services agreement.'' \9\ 
This definition generally tracks BZX Rule 2.13(a)(2)(D) (defining 
``Exchange staff), except that LTSE's definition specifies that only 
``certain'' Exchange employees are members of LTSE Regulation. The 
Exchange also made a renumbering change in LTSE Rule 9.521(b), which 
was necessitated by the addition of the new definition.
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    \9\ Proposed LTSE Rule 9.521(b)(4).
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    The Exchange changed the Rule 9.522(a) in two respects. First, the 
title was changed from ``Initiation by FINRA'' to ``Initiation by the 
Exchange.'' This clarifying change more accurately characterizes the 
process: under the rule, even where FINRA advises LTSE that it has 
reason to believe there is an eligibility issue, it is LTSE that issues 
the written notice to the Member or applicant for membership. Second, 
the Exchange amended Rule 9.522(a)(4) to provide that notice issued 
under this paragraph (a) will be served by electronic mail rather than 
via facsimile,\10\ and that service by electronic mail will be deemed 
complete upon sending the notice. These changes are consistent with BZX 
Rule 2.13(b)(1)(D).
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    \10\ The amended rule continues to provide that such notice may 
also be effected pursuant to LTSE Rules 9.131 and 9.134.
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    Lastly, the Exchange amended a number of provisions of LTSE Rule 
9.522(e). Previously, LTSE Rule 9.522(e)(1)(C) authorized LTSE to 
approve a written request for relief from the eligibility requirements 
by a disqualified Member or a sponsoring Member without the filing of 
an application by such disqualified Member or sponsoring Member if a 
disqualified Member or disqualified person is subject to this condition 
but is not otherwise subject to disqualification if a disqualified 
Member or sponsoring Member is a Member of both LTSE and another self-
regulatory organization. LTSE broadened that provision to also allow 
the Exchange to approve a written request by a disqualified person 
seeking to become a Member who is also a member of another self-
regulatory organization (``SRO''). As amended, LTSE Rule 9.522(e)(1)(C) 
is substantively identical to BZX Rule 2.13(b)(5)(A)(iii).
    The Exchange also supplemented LTSE Rule 9.522(e) by adding new 
subparagraph (3),\11\ which allows for the submission of an interim 
plan of heightened supervision in connection with the continued 
association of a disqualified person or a person seeking association 
with a Member. Such a plan must: identify an appropriately registered 
principal responsible for carrying out the interim plan of heightened 
supervision, who has signed the plan and acknowledged his or her 
responsibility for implementing and

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maintaining such plan; \12\ be in effect throughout the entirety of the 
application review process which shall be considered concluded only 
upon the final resolution of the eligibility proceeding; \13\ comply 
with the Exchange's supervision rules, including Chapter 5; \14\ be 
reasonably designed and tailored to include specific supervisory 
policies and procedures that address any regulatory concerns related to 
the nature of the disqualification, the nature of the sponsoring 
Member's business, and the disqualified person's current and proposed 
activities during the review process; \15\ and include a written 
representation from the sponsoring Member that the disqualified person 
is currently subject to an interim plan of heightened supervision.\16\ 
Proposed LTSE Rule 9.522(e)(3) is substantively identical to BZX Rule 
2.13(b)(6).
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    \11\ To accommodate the insertion of new subparagraphs (e)(3)-
(5), LTSE renumbered old subparagraph (3) (Rights of Disqualified 
Member, Sponsoring Member, Disqualified Person, and LTSE Regulation) 
as subparagraph (6).
    \12\ See proposed rule LTSE Rule 9.522(e)(3)(A).
    \13\ See id.
    \14\ See id.
    \15\ See id.
    \16\ See proposed rule LTSE Rule 9.522(e)(3)(B).
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    The Exchange also added LTSE Rule 9.522(e)(4), which allows the 
Exchange to reject an application seeking the continued association of 
a disqualified person filed pursuant to subparagraph (a)(3) or 
(b)(1)(B) of LTSE Rule 9.522 if it is substantially incomplete. An 
application will be deemed to be substantially incomplete if: it does 
not include the representation required by LTSE Rule 9.522(e)(3)(B); or 
Exchange staff determines that it does not include a reasonably 
designed interim plan of heightened supervision that complies with the 
standards of proposed LTSE Rule 9.522(e)(3)(A). A rejected application 
may be deemed to have not been filed. In such a case, the Exchange 
staff will provide the sponsoring Member notice of the delinquency and 
its reasons for doing so, and the sponsoring Member will have 10 
business days after service of the notice of delinquency to remedy the 
application (or such other time period as prescribed by Exchange 
staff). Proposed LTSE Rule 9.522(e)(4) is substantively identical to 
BZX Rule 2.13(b)(7).
    Lastly, proposed LTSE Rule 9.522(e)(5) provides that, if an 
applicant fails to remedy an application that is substantially 
incomplete, Exchange staff will serve a written notice on the 
sponsoring Member of its determination to reject the application and 
its reasons for doing so. Upon such rejection, the sponsoring Member 
must promptly terminate association with the disqualified person. 
Proposed LTSE Rule 9.522(e)(3) is substantively identical to BZX Rule 
2.13(b)(8).
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act \17\ in general. More 
specifically, the Exchange believes that the proposed rule change 
furthers the objectives of Section 6(b)(5) of the Act \18\ in that it 
is designed to promote just and equitable principles of trade by 
modifying the Exchange's practices regarding statutory 
disqualifications, which are restrictions that prevent an individual or 
a firm that has engaged in enumerated activities in Section 3(a)(39) of 
the Act \19\ from associating with or working for a broker-dealer or 
SRO, to conform more closely with the practices of other SROs.
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    \17\ 15 U.S.C. 78f.
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ 15 U.S.C. 78c(39).
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    The Exchange also believes that the proposed rule change is 
consistent with Section 6(b)(1) of the Act,\20\ which requires (among 
other things) that a national securities exchange be organized and have 
the capacity to be able to carry out the purposes of the Act and comply 
with its own rules. The proposed changes to the Exchange's statutory 
disqualification rules, which are consistent with those of other SROs, 
better organize LTSE to carry out the purposes of the Act. 
Additionally, the clarifying changes identified above assist LTSE in 
better complying with its own rules.
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    \20\ 15 U.S.C. 78f(b)(1).
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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 amendment is 
not intended to address any competitive issue, but rather is designed 
to align the Exchange's statutory disqualification procedures to those 
of other SROs. Consequently, the Exchange believes that the proposed 
rule change would not impose any burden on intramarket competition that 
is not necessary or appropriate in furtherance of the purposes of the 
Act.

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 proposed rule change is effective upon filing pursuant to 
Section 19(b)(3) of the Exchange Act \21\ and paragraph (f)(6) of Rule 
19b-4 thereunder,\22\ in that the proposed rule change does not 
significantly affect the protection of investors or the public 
interest; does not impose any significant burden on competition; and 
does not become operative for 30 days after filing or such shorter time 
as the Commission may designate.
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    \21\ 15 U.S.C. 78s(b)(3).
    \22\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(ii), the Commission may designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest.
    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend the rule 
change if it appears to the Commission that the action is necessary or 
appropriate in the public interest, for the protection of investors, or 
would otherwise further the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule 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#542621383179373b3939313a2027142731377a333b22"><span class="__cf_email__" data-cfemail="7b090e171e56181416161e150f083b081e18551c140d">[email&#160;protected]</span></a>. Please include 
file number SR-LTSE-2026-17 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-LTSE-2026-17. 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

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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-LTSE-2026-17 
and should be submitted on or before September 18, 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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-17550 Filed 8-27-26; 8:45 am]
BILLING CODE 8011-01-P


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