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NYSE Amends Procedures for Release of Material News by Listed CompaniesSeptember 15, 2015
On August 27, 2015, the New York Stock Exchange filed notice with the SEC to amend Section 202.06 of the Listed Company Manual, concerning the NYSE’s procedures for the release of material news to the public by listed companies (available here). The amendments became effective immediately upon filing and will become operational on September 28, 2015, unless suspended by the SEC.
Pursuant to Section 202.05 of the Listed Company Manual, NYSE companies are expected to “quickly” release information that might reasonably be expected to materially affect the market for their securities. The section notes that the timely release of information is one of the most fundamental purposes of the listing agreement between the NYSE and the listed company. Section 202.06 governs the timing and process for the release of the information required under Section 202.05.
The amendments are as follows:
Pre-Market Announcements. Section 202.06 requires that listed companies alert the NYSE prior to the release of material news to the market to provide sufficient time for the exchange to evaluate the information and to provide an opportunity for the exchange to halt trading in the company’s securities, if necessary.
The current version of Section 202.06 requires listed companies to provide notice to the NYSE ten minutes in advance of the release of material news, if the information is scheduled to be released during market hours (between 9:30 a.m. and 4:00 p.m. Eastern time) or “shortly before” the opening of trading on the exchange (between 9:00 a.m. and 9:30 a.m. Eastern time). The amendments extend the pre-market hours during which companies must give notice to the NYSE before announcing material news by requiring listed companies to notify the NYSE of any announcements made at or after 7:00 a.m. Eastern time. Accordingly, pursuant to the amendments, NYSE-listed companies will be required to notify the NYSE at least ten minutes before the release of any material news between the hours of 7:00 a.m. and 4:00 p.m. Eastern time.
Trading Halts. The current version of Section 202.06 allows the NYSE to impose a regulatory trading halt in a listed company’s security when a listed company announces material news shortly before the opening of trading on the exchange or during market hours. The amendments will not affect the NYSE’s ability to impose a trading halt in these circumstances but will expand the hours and circumstances under which the NYSE can impose trading halts.
The NYSE believes that a company’s release of material news during pre-market hours (between 7:00 a.m. and 9:30 a.m. Eastern time) can create market volatility but, given the lower trading volume during those hours, a listed company is better positioned to determine whether a trading halt is necessary. The amendments therefore allow the NYSE to implement a regulatory trading halt during pre-market hours if requested by a listed company pending the company’s announcement of material news. Such a pre-market trading halt would not impact trading on the NYSE, which does not begin until 9:30 a.m. Eastern time, but would halt trading on other national securities exchanges that open at 4:00 a.m. Eastern time.
The amendments also allow the NYSE to impose a regulatory trading halt in two additional circumstances. First, the NYSE may halt trading in a company’s securities while it is awaiting and evaluating additional information requested from the listed company related to: (i) material news; (ii) the company’s compliance with NYSE continued listing requirements; or (iii) any other information necessary to protect investors and the public interest. Second, the NYSE may halt trading in a listed company’s American Depositary Receipts (ADRs) or other listed securities if the NYSE-listed security (or security underlying the ADRs) is listed on or registered with another national securities exchange or foreign exchange or market and trading in such securities is halted by such other exchange or market for regulatory reasons.
Announcements After Market Close. The amendments advise listed companies that they should delay the release of material news after the close of trading until the earlier of: (i) the publication of the official closing price of the listed company’s securities on the exchange; or (ii) fifteen minutes after the close of trading on the exchange (i.e., generally, 4:15 p.m. Eastern time except for days on which the exchange closes early at 1:00 p.m.).
Methods for Release of Information. The amendments update the methods set forth in Section 202.06(C) for releasing material news, which is outdated. Consistent with current disclosure practices, listed companies will be required to either: (i) include the news in a Form 8-K or other SEC filing; or (ii) 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.
This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Rob Plesnarski, an O'Melveny partner licensed to practice law in the District of Columbia and Pennsylvania, Shelly Heyduk, an O’Melveny counsel licensed to practice law in California, and James Harrigan, an O'Melveny associate licensed to practice law in the District of Columbia and Maryland contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.
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