Rule 202.06 previously required listed companies to notify the NYSE at least ten minutes in advance of releasing material news if such release will take place shortly before the opening of trading or during market hours. The newly amended rule requires companies to comply with the Material News Policy between 7:00 a.m. and 4:00 p.m. Eastern Standard Time (EST). “Although trading on the Exchange does not begin until 9:30 a.m., the Exchange believes that material news released 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,” the NYSE’s rule proposal stated.
Pre-Market Halt
When a listed company releases material news during the course of the trading day, the NYSE typically halts trading temporarily to ensure full dissemination of the news. As highlighted by the NYSE, while trading on the Exchange does not begin until 9:30 a.m. EST, trading begins on NYSE Arca Equities, Inc., the Nasdaq Stock Market and other national securities exchanges at 4:00 a.m. EST. When the Exchange implements a regulatory trading halt to allow for the release of material news, other national securities exchanges that trade Exchange-listed securities also halt trading in that security until the Exchange lifts the halt.
Under the amended NYSE Listed Company Manual, between 7:00 a.m. and the opening of trading, the NYSE may implement a regulatory halt in circumstances where (i) the listed company has informed Exchange staff that it intends to make a public announcement of material news, and (ii) the listed company requests that trading in its listed securities be halted pending dissemination of the public announcement.
Trading Hours Halt
Rule 202.06 previously restricted the NYSE’s authority to halt securities trading to situations in which a listed company intended to release material news during market hours. Under the amendment rules, if it is necessary to request information from a listed company relating to (i) material news, (ii) the listed company’s compliance with Exchange continued listing requirements, or (iii) any other information which is necessary to protect investors and the public interest, the NYSE may halt trading in the listed company’s security until it has received and evaluated the requested information.
Material New Release After Trading Hours
The new rules also reflect the NYSE’s concerns that material news released immediately after 4:00 p.m. EST can interfere with the closing process. Although trading on the NYSE stops at 4:00 p.m., the order book for each listed security is manually closed by the security’s Designated Market Maker (DMM), a process that can take several minutes before the closing auction is completed. Because trading continues on other exchanges, if a listed company releases material news immediately after 4:00 p.m., there can be significant price movement on other markets when compared to the last sale price on the Exchange. As a result, a DMM can be executing trades at the NYSE closing price while the same security is simultaneously trading on other exchanges at a very different price.
To help avoid confusion to investors, Rule 202.06 now includes advisory text requesting that a listed company intending to release material news after the close of trading on the NYSE wait until the earlier of the publication of its security’s official closing price on the Exchange or 15 minutes after the scheduled closing time on the Exchange.
Methods of Releasing Material News
The NYSE requires companies to release material news by the fastest available means. However, the recommended methods set forth in the previous rule were outdated. Accordingly, the amendment requires that companies must release the material news to the market by either (i) including the news in a Form 8-K or other SEC filing, or (ii) issuing 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.
Breach of Contract Explained: Types and Consequences
Breach of contract disputes are the most common type of business litigation. Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. Understanding when to file a breach of contract lawsuit and how long you have to sue for breach of contract is essential […]
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide
Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]
Gross Lease vs. Net Lease: Understanding the Key Differences
Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]
What to Do If You Are Impacted by a Retailer Bankruptcy Part 2
Over the past year, brick-and-mortar stores have closed their doors at a record pace. Fluctuating consumer preferences, the rise of online shopping platforms, and ongoing economic uncertainty continue to put pressure on the retail industry. When a retailer seeks bankruptcy protection, a myriad of other businesses are often impacted. Whether you are a supplier, customer, […]
The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business
Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]
Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1
The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
