NYSE Amends Its Notice and Trading Halt Rule

Parker Poe Adams & Bernstein LLP
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The New York Stock Exchange has amended Section 202.06 of the NYSE Listed Company Manual to:

  • expand the pre-market hours during which NYSE-listed companies must provide prior notice of material news,
  • expand the circumstances under which NYSE may halt trading, and
  • provide guidance related to the release of material news after the close of trading.

Expanded pre-market notification period.

Section 202.06 previously required listed companies to notify NYSE at least ten minutes before releasing material news if the release will take place shortly before the opening of trading or during trading hours (meaning 9:30 am to 4 pm Eastern Time). (See this Doug’s Note.) NYSE concluded, however, that most companies release material news between 7 am and 9:30 am and that such information has the potential to cause market price and volume volatility once NYSE trading opens, as well as on other markets prior to NYSE’s open.

Amended Section 202.06 requires companies to notify NYSE at least ten minutes prior to a material news release between 7 am and 9:30 am. However, because NYSE is not open for trading before 9:30 am, it will impose a pre-market trading halt only at the request of the company, rather than on its own initiative. NYSE noted that Nasdaq has a comparable rule with respect to trading halts between 7 am and 9:30 am.

Expanded trading halts.

Section 202.06 also has been amended to expand the circumstances under which NYSE may institute a trading halt during market hours. NYSE now may do so whenever it is in the process of collecting information to resolve uncertainty regarding material news issued by a listed company or the company’s ongoing compliance with NYSE’s listing requirements.

The amended rule is consistent with Nasdaq’s Rule 4120(a)(5).

Post-close news releases.

Finally, NYSE noted that it can take several minutes to close a trade that occurred at the 4 pm closing price and that the same security can be trading on another trading market during that period. Therefore, a material news release immediately following the market close can result in price and volume volatility that may confuse investors.

Therefore, NYSE has revised the advisory text to Section 202.06 to:

  • request that listed companies wait until the earlier of publication of their security’s official closing price on NYSE or 15 minutes after NYSE’s closing time before releasing material news, and

  • note that NYSE no longer has an off-hours trading session.

Amendment effective date.

Amended Section 202.06 will become effective by September 28, 2015, which is thirty days after the date it was first filed with the SEC.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

© Parker Poe Adams & Bernstein LLP

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