On 29 August 2017, the SEC announced a proposed rule change submitted by the NYSE that would amend Section 202.06 of the NYSE Listed Company Manual. Section 202.06 currently provides only an advisory text requesting that listed companies intending to release material news after the close of trading on the NYSE wait until the earlier of the publication of their security's official closing price on the NYSE or 15 minutes after the scheduled closing time on the NYSE.
For the purpose of mitigating the risk of market disruption and investor confusion, the proposal intends to prohibit listed companies from issuing material news after the NYSE's trading session official closing time (4:00 p.m. Eastern Time) until the earlier of (i) the publication of such company's official closing price on the NYSE or (ii) five minutes after the official closing time.
For the NYSE, this proposed Section 202.06 amendment would mainly:
- prevent the occurrence of significant news-related price volatility on other markets during the brief period between the NYSE's official closing time and the completion of the closing auction. Therefore, significant price differences in nearly contemporaneous trades on other markets and the closing price on the NYSE would be avoided, without imposing a burden on competition; and
- promote just and equitable principles of trade by ensuring that participants in a NYSE closing auction do not have their trades executed at a price that is inconsistent with contemporaneous trading prices on other markets that reflect material news that was released after the NYSE's official closing time.
The SEC's announcement is available at:
https://www.sec.gov/rules/sro/nyse/2017/34-81494.pdf
The proposed rule change from NYSE is available at:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
