The New York Stock Exchange (“NYSE”) has amended its rule on release of material news to the public, effective September 26, 2015. Most importantly, the amendments extend the pre-market hours during which companies must give notice to the NYSE before announcing material news, so that companies will have to notify the NYSE in connection with any announcements made at or after 7:00 a.m. Eastern time. The amendments also provide guidance about the release of material news after the close of trading, update the acceptable methods for releasing material news, and give the NYSE additional authority to halt trading in specific situations.
Under the NYSE’s material news policy, found in Section 202.05 of the Listed Company Manual, NYSE companies must release quickly to the public any news or information that might reasonably be expected to materially affect trading in their securities. The amendments affect Section 202.06, which details the procedures for public release of information under the material news policy.
The NYSE requires that listed companies alert it prior to announcing material news so that the NYSE has the opportunity to halt trading of a company’s securities if it believes doing so is necessary to protect investors and the public. Currently, under Section 202.06, a listed company must alert the NYSE at least ten minutes in advance of releasing material news if the release occurs during market hours or “shortly before” the opening of trading at 9:30 a.m. (all times are Eastern). According to the NYSE, most companies announce material news between 7:00 a.m. and 9:30 a.m., which has the potential to impact pre-market trading in other market centers and on the NYSE itself upon opening. Accordingly, the NYSE has amended Section 202.06 to require listed companies to notify it when they intend to release material news between the hours of 7:00 a.m. and 4:00 p.m., when trading closes. If a company believes that a trading halt during pre-market hours is appropriate due to the nature of the news it plans to release, the company will be responsible for advising the NYSE. The NYSE will issue pre-market trading halts only at the request of a company. However, if it appears that the dissemination of material news will not be complete prior to opening, in order to facilitate an orderly opening process, the NYSE may independently decide to temporarily halt trading.
The amendments provide guidance about the release of material news shortly after the close of trading on the NYSE. Specifically, the guidance states that companies should delay announcing material news until the earlier of the publication of their security’s official closing price on the NYSE or fifteen minutes after the close of trading at 4:00 p.m. This amendment is intended to avoid interfering with the NYSE’s closing process.
Methods of Releasing Material News to the Public
The amendments modernize language specifying the methods that a listed company may use to release material news. Under Section 202.06(C), news must be released by the “fastest available means.” The current rule goes on to state that telephone, fax, and hand-delivery are among the acceptable means. The NYSE has updated this language to require that listed companies either: (1) include the news in a Form 8-K or other filing with the Securities and Exchange Commission (“SEC”), or (2) issue the news in a press release to the major news wire services which, at a minimum, include Dow Jones & Company, Inc., Reuters Economic Services and Bloomberg Business News.
In addition to addressing pre-market trading halts (discussed above), the amendments give the NYSE authority to halt trading in two additional situations: (1) when the NYSE believes a halt in trading is necessary for the protection of investors in order to provide time to request certain information from listed companies, and (2) when an NYSE-listed company’s securities are also traded on another market and trading in that market is halted for regulatory reasons. In the first situation, the NYSE can halt trading if it believes this is necessary to request information from a listed company relating to: (a) material news, (b) the listed company’s compliance with the NYSE continued listing requirements, or (c) any other information that the NYSE believes is necessary to protect investors and the public interest. In these circumstances, the NYSE may halt trading until it has received and evaluated any requested information. In the second situation, the NYSE may halt trading in an American Depositary Receipt (“ADR”) or other listed security when that NYSE-listed security (or the security underlying the ADR) is listed on another exchange or market, whether national or foreign, and the other exchange or market (or the responsible regulator) halts trading in that security for regulatory reasons. Each of these changes brings the NYSE in line with Nasdaq Stock Market Rules.
Timing of Effectiveness
The amendments to the Listed Company Manual were effective upon filing with the SEC under a process for approving “non-controversial” rule changes set forth in the Securities Exchange Act of 1934 and will become operational on September 26, 2015 (unless the SEC designates an earlier date). As part of this process, the amendments are currently subject to a public comment period, and the SEC may temporarily suspend them within 60 days of the filing if it believes that doing so is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the statute.
A redline of the changes to the Listed Company Manual is available in Exhibit 5 of the NYSE filing, which is available here.