The NYSE MKT has amended Sections 401 and 402 of the NYSE MKT Company Guide (Company Guide) effective March 29, 2016.1 The amendments harmonize the NYSE MKT’s material news and trading halt policies with changes made in September 2015 by the New York Stock Exchange (NYSE) to its comparable policies.2 Although the amendments took effect March 29, 2016, the NYSE MKT has informally indicated that it expects listed issuers to comply with the amended policies beginning on Monday, April 4, 2016.
NYSE MKT-listed issuers should familiarize themselves with the amendments to ensure that their public disclosure of material news and non-routine information requiring immediate release under the NYSE MKT’s material news policy (Material News Policy) complies with amended Sections 401 and 402. Failure to comply with the expanded material news notification requirements could result in a possible formal notice of non-compliance with NYSE MKT rules in the form of a warning letter or a deficiency letter.
Expanded Pre-Market Material News Policy
Sections 401 and 402 of the Company Guide currently require listed issuers to notify the NYSE MKT at least ten minutes before releasing material news or non-routine information if such release will take place shortly before the opening of NYSE MKT trading at 9:30 a.m. Eastern Time (ET) or during the NYSE MKT trading session, which is typically between 9:30 a.m. and 4:00 p.m. ET. The NYSE MKT considers material news to be any news that is reasonably likely to have a material impact on the price or trading volume of a listed security.3
As amended, Sections 401 and 402 now require NYSE MKT-listed issuers to notify the NYSE MKT at least ten minutes before the release of material news or non-routine information intended to be made between 7:00 a.m. and 4:00 p.m. ET.4 To comply with the Material News Policy’s notification requirements during the expanded pre-market hours, listed issuers must call the NYSE MKT’s Market Watch Group at 212-656-5414 or 877-699-2578 and provide a copy of any written form of the material news or non-routine announcement at the same time via email to firstname.lastname@example.org.
Although the amendments to Sections 401 and 402 effectively expand the pre-market hours in which the NYSE MKT may declare a trading halt, listed issuers are now solely responsible for advising the NYSE MKT during the pre-market hours of 7:00 a.m. to 9:30 a.m. ET whether a trading halt is appropriate pending dissemination of material news or non-routine information during that period. Thus, during pre-market hours, the NYSE MKT will only institute a trading halt for the dissemination of material news or non-routine information upon a listed issuer’s request.5 The NYSE MKT believes this policy is appropriate because a listed issuer is best positioned to determine the appropriateness of a trading halt given the news being released. However, consistent with its current practice, the NYSE MKT may temporarily halt trading in its own discretion to facilitate an orderly opening process if it appears that the release of material news or non-routine information will not be complete before the opening of trading.
Post-Market Close Release of Material News
The amendments add commentary to Section 402 asking that listed issuers intending to release material news after the close of NYSE MKT trading delay doing so until the earlier of:
- the publication of their listed security’s official closing price on the NYSE MKT; or
- 15 minutes after the scheduled close of NYSE MKT trading.
Although the NYSE MKT typically closes at 4:00 p.m. ET, on certain days each year it closes at 1:00 p.m. ET. The phrase “15 minutes after the scheduled close” in the second bullet above will apply to these early closings as well as the 4:00 p.m. ET closings.
Expanded Trading Halt Authority
Sections 401 and 402 currently limit the NYSE MKT’s trading halt authority to situations when a listed issuer intends to release material news or non-routine information shortly before or during market hours. In addition to the previously discussed authority to impose a pre-market trading halt, the amendments permit the NYSE MKT to halt trading in situations where the NYSE MKT believes it is necessary to request, receive and evaluate information from a listed issuer relating to:
- material news;
- compliance with the NYSE MKT’s continued listing requirements; or
- any other information which is necessary to protect investors and the public interest.
The NYSE MKT may also now halt trading in an American Depository Receipt (ADR) or other NYSE MKT-listed security when another national securities exchange or foreign exchange or market (or regulatory authority overseeing such exchange or market) on which the security or the security underlying the ADR is listed or registered halts trading in such security for regulatory reasons.
To avoid trading halts, excessive trading volatility in connection with the release of material news or non-routine information and violations of the Material News Policy, NYSE MKT-listed issuers should:
- consider updating their controls and procedures around the release of material news and non-routine information to (1) take into account the expanded pre-market hours during which the Material News Policy applies and the NYSE MKT’s guidance on post-market releases of material news and (2) determine whether the release of material news or non-routine information during the period between 7:00 a.m. and 9:30 a.m. ET necessitates a trading halt pending dissemination of the information and to ensure that when a trading halt is necessary, a trading halt request is provided to the NYSE MKT;
- familiarize their investor relations group with the amended Material News Policy to ensure that group takes the amendments to the policy into account in planning releases of material news or non-routine information;
- remember that because earnings releases are not excepted from the Material News Policy, earnings releases must follow the amended policy regarding prior notification to the NYSE MKT or be issued at a time outside the period between 7:00 a.m. and 4:15 p.m. ET (for example, issuers should consider submitting their earnings releases to the SEC under Item 2.02 of a Current Report on Form 8-K and releasing the actual earnings release to the wires at a time well enough in advance of 7:00 a.m. ET so that the Form 8-K is posted and available on EDGAR and the earnings releases are available to the public over the wire before 7:00 a.m. ET); and
- even though only directed to NYSE issuers, consider the NYSE’s 2014 guidance about compliance with the Material News Policy, especially during the period between 7:00 a.m. and 9:30 a.m. ET, in connection with (1) the verbal release of material news during the course of a management presentation, earnings call, investor call or investor conference and (2) the pricing of secondary offerings of securities in overnight transactions.6