The proposed rule change represents a shift in the NYSE's approach to managing investor confusion, and related price distortions, due to material news releases shortly after trading on the NYSE closes at 4:00 p.m. The NYSE has observed investor confusion when a listed company releases material news shortly after the NYSE closing time but before the NYSE has been able to publish the company's official closing price – which is usually published within five minutes of the NYSE's closing time. In this situation, a company's stock can trade on other open markets at materially different prices than the NYSE's official closing price. By amending Section 202.06 of its Listed Company Manual to prohibit listed companies from releasing material news shortly after the NYSE closing time, the NYSE aims to improve the consistency between prices of nearly contemporaneous trades on the NYSE, on the one hand, and other trading markets that occur at or shortly after the NYSE's closing time.
The current version of Section 202.06 of the NYSE Listed Company Manual includes advisory text that requests that each listed company delay material news releases until after the NYSE has announced the company's closing price, or 15 minutes after the NYSE's closing time. This advisory text will be retained in the amended version of Section 202.06 to help avoid investor confusion when the announcement of the official NYSE closing price is delayed by more than five minutes.
The proposed rule change does not impact the NYSE's expectation, which is contained in Section 202.05 of the NYSE Listed Company Manual, that listed companies release material news as quickly as possible. However, per its statement supporting the rule change, the NYSE says that it believes "the brief delay mandated by the proposed amendment [to Section 202.06] is desirable in light of the benefit of the reduced likelihood of the occurrence [of] investor confusion..."
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