DEFINITION of 19c3 Stock

19c3 stock is any stock listed on an equity exchange after April 26, 1979. This classification allows members of exchanges to trade these stocks off the board as opposed to being physically present on an exchange trading floor. The classification of a 19c3 stock refers to SEC rule 19c3, the formal regulation that allows off-board transactions to be made.


Prior to April 26, 1979, members of the major exchanges (e.g., the New York Stock Exchange) were not allowed to conduct stock trades if they were not physically present at an exchange. The designation of 19c3 stock was the first step toward the creation of the National Market System (NMS). The initial pilot NMS program included 30 19c3 stocks. Almost all stocks listed on exchanges are currently 19c3 stocks. Decades ago, before 1979, stock trading was very much a face-to-face process with verbal orders, paper tickets and lots of running around and yelling in excited markets. As the number of stock listings grew and computer systems became more sophisticated to handle trading volumes for the steady increase in market participants, the SEC felt the need to evolve. The benefits of off-board trading were obvious: speed, efficiency, lower cost, fewer trading errors, computerized records. As a practical matter today, no one thinks of a stock as a 19c3 stock; an investor takes it for granted that a stock that he or she wants to trade will be executed electronically and nearly instantaneously when an order is submitted.

Sometimes a stock order has to be transacted by members on an exchange floor, but this would be a rare case or special situation.