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NYSE Proposes to Expand Rules on Notifications of Material News and Trading Halts
Practical Law Legal Update w-000-5571 (Approx. 4 pages)
NYSE Proposes to Expand Rules on Notifications of Material News and Trading Halts
by Practical Law Corporate & Securities
| Published on 01 Sep 2015 • USA (National/Federal) |
The NYSE proposed amendments to Section 202.06 of its Listed Company Manual, which, under certain circumstances, requires listed companies to notify the NYSE at least ten minutes before disseminating material news and gives the NYSE authority to halt trading in a listed company's securities.
On August 27, 2015, the NYSE proposed amendments to Section 202.06 of its Listed Company Manual, which, under certain circumstances, requires listed companies to notify the NYSE at least ten minutes before disseminating material news and gives the NYSE authority to halt trading in a listed company's securities.
Currently, Section 202.06 gives the NYSE authority to impose a regulatory trading halt when a listed company announces material news shortly before the opening of trading on the NYSE or during the NYSE's trading session (currently 9:30 a.m. ET to 4:00 p.m. ET). Current Section 202.06 requires listed companies to notify the NYSE at least ten minutes before releasing material news if the release will take place shortly before the opening of trading or during the trading session (Material News Policy).
The proposed amendments to Section 202.06 would require companies to comply with the Material News Policy between the hours of 7:00 a.m. ET and 4:00 p.m ET. During the added pre-market hours of 7:00 a.m. to 9:30 a.m., the company would be solely responsible for advising the NYSE on whether it thinks a trading halt would be appropriate pending dissemination of the public announcement. A pre-market trading halt by the NYSE means that trading of the securities is also temporarily halted on other securities exchanges, such as NYSE Arca Securities and NASDAQ, which open for trading at 4:00 a.m. ET.
Although a listed company would have sole discretion in deciding whether to halt trading in the pre-market hours, the NYSE would have the authority to temporarily halt trading solely in its discretion in order to facilitate an orderly opening process if it appears that dissemination of material news would not be complete before the opening of trading on the NYSE at 9:30 a.m.
The proposed amendments would also expand the circumstances under which the NYSE may institute a regulatory halt on trading. Currently, Section 202.06 limits the NYSE's authority to halt trading to situations when a listed company intends to release material news during market hours.
The proposed amendments would allow the NYSE to halt trading in a listed company's security if it is necessary to request, receive and evaluate information from a listed company relating to:
- Material news.
- The listed company's compliance with the NYSE's continued listing requirements.
- Any other information which is necessary to protect investors and the public interest.
The proposal would also:
- Add advisory text to Section 202.06 requesting that listed companies intending to release material news after the close of trading on the NYSE wait until the earlier of:
- the publication of their security's official closing price on the NYSE; or
- 15 minutes after the scheduled closing time on the NYSE.
- Amend Section 202.06 to state that the NYSE may halt trading in an American Depositary Receipt (ADR) or other security listed on the NYSE, when the NYSE-listed security (or other security underlying the ADR) is listed on or registered with another national securities exchange or foreign exchange or market and the other exchange (or regulatory authority overseeing the exchange) halts trading in the security for regulatory reasons.
- Replace outdated language on methods of releasing material information with a statement that listed companies releasing material news should either:
- Include the news in a Form 8-K or other SEC filing; or
- Issue the news in a press release to the major news wire services, including at a minimum, Dow Jones & Company, Inc., Reuters Economic Services and Bloomberg Business News.
On September 9, 2015, the proposal was published in the Federal Register. The proposal will take effect on September 28, 2015.
To learn more about the rules governing the disclosure of material information by reporting companies, see Practice Note, Disclosing Nonpublic Information and Guide to Requirements for Submitting Data to the NYSE: Checklist.