What Is SEC Form 19b-4?
SEC Form 19b-4 is a form that is used to inform the Securities and Exchange Commission (SEC) of a proposed rule change by a self-regulatory organization (SRO) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934.
An SRO is a non-governmental body that exercises some degree of regulatory authority over an industry or profession. Examples of SROs in the financial industry would include stock exchanges such as the New York Stock Exchange (NYSE) or Nasdaq, registered clearing agencies such as the Depository Trust & Clearing Corporation (DTCC), and the Municipal Securities Rulemaking Board.
- SEC Form 19b-4 is used by covered self-regulatory organizations (SROs) to record a rule change with the SEC.
- Many stock exchanges and financial regulatory bodies are SROs, and so their bylaws, rules, and regulations must be filed with the SEC for public recordkeeping.
- This form, including relevant exhibits, is intended to elicit information necessary for the public to provide meaningful comment on the proposed rule change.
How SEC Form 19b-4 Works
Self-regulatory organizations (SROs) are required to file SEC Form 19b-4 with the SEC before making any changes to its rules, specifically with regard to trading rules. In the filing, the SRO must justify the new rules to SEC staff, making clear that the rule change supports fair trading markets, and provides investor protections and requisite oversight procedures.
All 19b-4 filings are made available on the SEC's Electronic Document Gathering, Analysis and Retrieval (EDGAR) system. Once the form is officially filed, the SEC review and approval or denial can take 90 days. The SEC staff will reject 19b-4 filings if any of the required information is excluded from the final filing.
The SEC also invites the public to have their say. A public comment period follows each 19b-4 filing whereby other exchanges and the public can voice support or opposition to the proposed rule change. During this time, interested persons are invited to submit in writing their views and arguments, including whether the rule being proposed is consistent with the Securities Exchange Act of 1934.
Understanding Self-Regulatory Organizations (SROs)
Although SROs are private organizations, they are still subject to government-imposed regulation to a degree. The government delegates some aspects of the industry oversight to SROs. Any applicable laws or governmental regulations will apply and be primary while those set by the SRO become supplemental.
Since the SRO has some regulatory influence over an industry or profession, it can often serve as a watchdog to guard against fraud or unprofessional practices. The ability of an SRO to exercise regulatory authority, however, does not stem from a grant of power from the government.
Instead, SROs often accomplish control through internal mechanisms that regulate the flow of business operations. The authority may also come from an external agreement between like businesses. The purpose of these organizations is to govern from within while avoiding ties to a country's governance.
Examples of Self-Regulatory Organizations (SROs)
Some examples of SROs that would likely file a Form 19b-4 include:
- The New York Stock Exchange (NYSE)
- The Financial Planning Association (FPA)
- The Chicago Board of Trade (CBOT)
- The American Council of Life Insurers (ACLI)
- The Financial Industry Regulatory Authority (FINRA)
- The Fixed Income Clearing Corporation (FICC)
- The Options Clearing Corporation (OCC)
- The American Institute of Certified Public Accounts (AICPA)