What is SEC Form 19b-4?
SEC Form 19b-4 is a form used to notify 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 include stock exchanges such as the New York Stock Exchange (NYSE) or the Nasdaq, registered clearing agencies such as the Depository Trust & Clearing Corporation (DTCC), and the City Securities Regulatory Council movables.
Key points to remember
- SEC Form 19b-4 is used by Covered Self-Regulatory Organizations (SROs) to file a rule change with the SEC.
- Many stock exchanges and financial regulators are SROs, and therefore their bylaws, rules, and regulations must be filed with the SEC for public record keeping.
- This form, including relevant supporting documentation, is intended to obtain the information necessary for the public to provide meaningful feedback on the proposed rule change.
How the SEC 19b-4 form works
Self-regulatory organizations (SROs) are required to file SEC Form 19b-4 with the SEC before making any changes to its rules, particularly with respect to trading rules. In the filing, the SRO must justify the new rules to SEC staff, making it clear that the rule change supports fair trading markets and provides investor protections and required oversight procedures.
All 19b-4 filings are made available on the SEC’s Electronic Document Collection, Analysis, and Retrieval (EDGAR) system. Once the form is officially filed, the review and approval or denial by the SEC may take 90 days. 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 speak. A public comment period follows each 19b-4 filing during which other exchanges and the public can express support for or opposition to the proposed rule change. Meanwhile, interested persons are invited to submit their views and arguments in writing, including whether the proposed rule complies with the Securities Exchange Act of 1934.
Understanding Self-Regulatory Organizations (SROs)
Although SROs are private organizations, they are still subject to some regulation imposed by the government. The government delegates some aspects of industry oversight to SROs. Any applicable government laws or regulations will apply and be primary while those established by the SRO will become supplementary.
Since the SRO wields some regulatory influence over an industry or profession, it can often act as a watchdog to guard against fraud or unprofessional practices. However, the ability of an SRO to exercise regulatory power does not arise from a grant of power by the government.
Instead, SROs often exercise control through internal mechanisms that regulate the flow of business transactions. Authority can also come from an external agreement between similar companies. The purpose of these organizations is to govern from within while avoiding ties to the governance of a country.
Examples of Self-Regulatory Organizations (SROs)
Here are some examples of SROs that may file a Form 19b-4: