On August 27, 2015, the New York Stock Exchange (the “NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) a proposed change to Section 202.06 of the NYSE Listed Company Manual (the “Manual”). The rule change would expand the hours during which listed companies are required to notify the Exchange prior to disseminating material news. It would also permit the Exchange to halt trading in the issuer’s securities in certain additional circumstances and provide guidance related to the release of material news after the close of trading.
The current rule requires listed companies to notify the Exchange at least ten minutes in advance of releasing material news if the release will take place shortly before the opening of trading or during trading hours (the “Material News Policy”). The proposed rule change would require issuers to comply with the Material News Policy between 7:00 a.m. and 4:00 p.m. Eastern Time. The proposal reflects the Exchange’s view that, although trading on the Exchange does not begin until 9:30 a.m., material news released during the pre-opening period between 7:00 a.m. and 9:30 a.m. has the potential to cause volatility in both price and volume during pre-market trading that occurs on other market centers as well as once trading opens on the Exchange.
At the end of the trading day, in order to avoid interference with the closing of the order book in a Company’s securities by its Designated Market Maker, the proposed rule would request, in advisory text, that Companies wait to disseminate material news at the close of the market until the earlier of 15 minutes after the end of trading (typically 4:15 PM, but earlier on certain days, typically prior to holidays) or when the Designated Market Maker closes its book.
Currently, when a Company releases material news during the course of the trading day the Exchange will typically halt trading to allow the news to be disseminated fully. Under the proposed rule change, the Exchange would be permitted, during the pre-opening period between 7:00 AM and 9:30 AM, to halt trading in where the Company has informed the Exchange staff that it intends to make a public announcement of material news and the Company requests that trading be halted. Because trading during this period is typically light, and conducted primarily by institutional investors, the Exchange believes it is appropriate to halt trading only where the issuer requests that it do so.
Last, the rule expands the circumstances in which the Exchange can institute a trading halt. Currently, the Exchange’s authority is limited to halting trading in situations when a listed company intends to release material news during market hours. The proposal would expand its authority to halt trading in circumstances where it requests additional information from an issuer. The trading halt may continue until the Exchange has received and evaluated the information. This rule change mirrors current Nasdaq Stock Market Rule 4120.