29 C.F.R. § 2550.408b-19

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Statutory exemption for cross-trading of securities.

CFR 2008 annual edition (revised as of 2008-07-01) · superseded Jul 1, 2009 · last amended by 72 FR 6478, Feb. 12, 2007

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(a) In General.

(1) Section 408(b)(19) of the Employee Retirement Income Security Act of 1974 (the Act) exempts from the prohibitions of section 406(a)(1)(A) and 406(b)(2) of the Act any cross-trade of securities if certain conditions are satisfied. Among other conditions, the exemption requires that the investment manager adopt, and effect cross-trades in accordance with, written cross-trading policies and procedures that are fair and equitable to all accounts participating in the cross-trading program, and that include:

(i) A description of the investment manager's pricing policies and procedures, and

(ii) The investment manager's policies and procedures for allocating cross-trades in an objective manner among accounts participating in the cross-trading program.

(2) Section 4975(d)(22) of the Internal Revenue Code of 1986 (the Code) contains parallel provisions to section 408(b)(19) of the Act. Effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 214 (2000 ed.), transferred the authority of the Secretary of the Treasury to promulgate regulations of the type published herein to the Secretary of Labor. Therefore, all references herein to section 408(b)(19) of the Act should be read to include reference to the parallel provisions of section 4975(d)(22) of the Code.

(3) Section 408(b)(19)(D) of the Act requires that a plan fiduciary for each plan participating in the cross-trades receive in advance of any cross-trades disclosure regarding the conditions under which the cross-trades may take place. This disclosure must be in a document that is separate from any other agreement or disclosure involving the asset management relationship. The disclosure must contain a statement that any investment manager participating in a cross-trading program will have a potentially conflicting division of loyalties and responsibilities to the parties involved in any cross-trade transaction.

(4) The standards set forth in this section apply solely for purposes of determining whether an investment manager's written policies and procedures satisfy the content requirements of section 408(b)(19)(H) of the Act. Accordingly, such standards do not determine whether the investment manager satisfies the other requirements for relief under section 408(b)(19) of the Act.

(b) Policies and Procedures.

(1) In General. This paragraph specifies the content of the written policies and procedures required to be adopted by an investment manager and disclosed to the plan fiduciary prior to authorizing cross-trading in order for transactions to qualify for relief under section 408(b)(19) of the Act.

(2) Style and Format. The content of the policies and procedures required by this paragraph must be clear and concise and written in a manner calculated to be understood by the plan fiduciary authorizing cross-trading. Although no specific format is required for the investment manager's written policies and procedures, the information contained in the policies and procedures must be sufficiently detailed to facilitate a periodic review by the compliance officer of the cross-trades and a determination by such compliance officer that the cross-trades comply with the investment manager's written cross-trading policies and procedures.

(3) Content.

(i) An investment manager's policies and procedures must be fair and equitable to all accounts participating in its cross-trading program and reasonably designed to ensure compliance with the requirements of section 408(b)(19)(H) of the Act. Such policies and procedures must include:

(A) A statement of policy which describes the criteria that will be applied by the investment manager in determining that execution of a securities transaction as a cross-trade will be beneficial to both parties to the transaction;

(B) A description of how the investment manager will determine that cross-trades are effected at the “independent current market price” of the security (within the meaning of § 270.17a-7(b) of Title 17, Code of Federal Regulations and SEC no-action and interpretative letters thereunder) as required by section 408(b)(19)(B) of the Act, including the identity of sources used to establish such price;

(C) A description of the procedures for ensuring compliance with the $100,000,000 minimum asset size requirement of section 408(b)(19). A plan or master trust will satisfy the minimum asset size requirement as to a transaction if it satisfies the requirement upon its initial participation in the cross-trading program and on a quarterly basis thereafter;

(D) A description of how the investment manager will mitigate any potentially conflicting division of loyalties and responsibilities to the parties involved in any cross-trade transaction;

(E) A requirement that the investment manager allocate cross-trades among accounts in an objective and equitable manner and a description of the allocation method(s) available to and used by the investment manager for assuring an objective allocation among accounts participating in the cross-trading program. If more than one allocation methodology may be used by the investment manager, a description of what circumstances will dictate the use of a particular methodology;

(F) Identification of the compliance officer responsible for periodically reviewing the investment manager's compliance with section 408(b)(19)(H) of the Act and a statement of the compliance officer's qualifications for this position; and

(G) A statement which describes the scope of the review conducted by the compliance officer, specifically noting whether such review is limited to compliance with the policies and procedures required by 408(b)(19)(H), or whether such review extends to any determinations regarding the overall level of compliance with the other requirements of section 408(b)(19) of the Act.

(ii) Nothing herein is intended to preclude an investment manager from including such other policies and procedures not required by this regulation as the investment manager may determine appropriate to comply with the requirements of section 408(b)(19).

(1) The term “account” includes any single customer or pooled fund or account.

(2) The term “compliance officer” means an individual designated by the investment manager who is responsible for periodically reviewing the cross-trades made for the plan to ensure compliance with the investment manager's written cross-trading policies and procedures and the requirements of section 408(b)(19)(H) of the Act.

(3) The term “plan fiduciary” means a person described in section 3(21)(A) of the Act with respect to a plan (other than the investment manager engaging in the cross-trades or an affiliate) who has the authority to authorize a plan's participation in an investment manager's cross-trading program.

(4) The term “investment manager” means a person described in section 3(38) of the Act.

(5) The term “plan” means any employee benefit plan as described in section 3(3) of the Act to which Title I of the Act applies or any plan defined in section 4975(e)(1) of the Code.

(6) The term “cross-trade” means the purchase and sale of a security between a plan and any other account managed by the same investment manager.

Source credit, amendments & notes

[72 FR 6478, Feb. 12, 2007]

29 C.F.R. § 2550.408b-19 — Statutory exemption for cross-trading of securities. · CFR 2008 annual edition (revised as of 2008-07-01) · https://pensionresource.website/EAMain?content=EAMain.Law&id=cfr29-2550.408b-19&asof=2007-07-01 · printed Oct 16, 2026

Implements

ERISA § 408 (29 U.S.C. § 1108) Exemptions from prohibited transactions

Guidance addressing this section

No documents are primarily about this section.

Also cited in 21 other documents

Department of Labor (EBSA)

Proposed Rules

91 FR 16088Proposed Mar 31, 2026 — Fiduciary Duties in Selecting Designated Investment Alternatives Comments due Jun 1, 2026
91 FR 4348Proposed Jan 30, 2026 — Improving Transparency Into Pharmacy Benefit Manager Fee Disclosure Comments due Mar 31, 2026
89 FR 5624Proposed Jan 29, 2024 — Automatic Portability Transaction Regulations Comments due Mar 29, 2024
86 FR 57272Proposed Oct 14, 2021 — Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights Comments due Dec 13, 2021
85 FR 55219Proposed Sep 4, 2020 — Fiduciary Duties Regarding Proxy Voting and Shareholder Rights Comments due Oct 5, 2020
85 FR 39113Proposed Jun 30, 2020 — Financial Factors in Selecting Plan Investments Comments due Jul 30, 2020
79 FR 13949Proposed Mar 12, 2014 — Amendment Relating to Reasonable Contract or Arrangement Under Section 408(b)(2)-Fee Disclosure Comments due Jun 10, 2014
77 FR 74063Proposed Dec 12, 2012 — Amendments to the Abandoned Plan Regulations Comments due Feb 11, 2013
76 FR 31544Proposed Jun 1, 2011 — Requirements for Fee Disclosure to Plan Fiduciaries and Participants-Applicability Dates Comments due Jun 15, 2011
75 FR 73987Proposed Nov 30, 2010 — Target Date Disclosure Comments due Jan 14, 2011
75 FR 9360Proposed Mar 2, 2010 — Investment Advice-Participants and Beneficiaries Comments due May 5, 2010

Final Rules

90 FR 28009 Jul 1, 2025 — Removal of Definition of “Plan Assets”-Insurance Company General Accounts
89 FR 43636 May 17, 2024 — Abandoned Plan Regulations
87 FR 73822 Dec 1, 2022 — Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights
85 FR 81658 Dec 16, 2020 — Fiduciary Duties Regarding Proxy Voting and Shareholder Rights
85 FR 72846 Nov 13, 2020 — Financial Factors in Selecting Plan Investments
80 FR 14301 Mar 19, 2015 — Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans-Timing of Annual Disclosure
77 FR 41678 Jul 16, 2012 — Amendment Relating to Reasonable Contract or Arrangement Under Section 408(b)(2)-Fee Disclosure/Web Page
77 FR 5632 Feb 3, 2012 — Reasonable Contract or Arrangement Under Section 408(b)(2)-Fee Disclosure
76 FR 66136 Oct 25, 2011 — Investment Advice-Participants and Beneficiaries
76 FR 42539 Jul 19, 2011 — Requirements for Fee Disclosure to Plan Fiduciaries and Participants-Applicability Dates

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Each row is a version of the text as published by the official source. Code dates are the edition/release point that first reflected the change; regulation dates are eCFR effective dates. The library checks the official sources automatically, so new versions appear here on their own; “run” opens the sync that recorded a version.

Effective	Through	Source	Amended by
Jul 1, 2007	Jun 30, 2009	CFR 2008 annual edition (revised as of 2008-07-01) run 127	72 FR 6478, Feb. 12, 2007	View
Jul 1, 2009	Jun 30, 2014	CFR 2013 annual edition (revised as of 2013-07-01) run 127	73 FR 58458, Oct. 7, 2008	View · Redline (sign in)
Jul 1, 2014	current	eCFR amendment effective 2017-01-01 run 2	73 FR 58458, Oct. 7, 2008	View · Redline (sign in)

Provision-level history (blame)