Document ID: SEC-2015-1484-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2015-09-09T04:00Z

[Federal Register Volume 80, Number 174 (Wednesday, September 9, 2015)]
[Notices]
[Pages 54362-54365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-22603]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75809; File No. SR-NYSE-2015-38]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Section 202.06 of the NYSE Listed Company Manual

September 2, 2015.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 27, 2015, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend section 202.06 of the NYSE Listed 
Company Manual (the ``Manual'') to expand the pre-market hours during 
which listed companies are required to notify the Exchange prior to 
disseminating material news, to permit the Exchange to halt trading in 
certain additional circumstances, including when it needs to obtain 
more information about a listed company news release, and to provide 
guidance related to the release of material news after the close of 
trading on the Exchange. The text of the proposed rule change is 
available on the Exchange's Web site at www.nyse.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The NYSE proposes to amend section 202.06 of the Manual to (i) 
expand the pre-market hours during which listed companies are required 
to notify the Exchange prior to disseminating material news, and (ii) 
provide the Exchange with authority to halt trading (a) during pre-
market hours at the request of a listed company, (b) when the Exchange 
believes it is necessary to request certain information from listed 
companies, and (c) when an Exchange-listed security is also listed on 
another national or foreign securities exchange and such other exchange 
halts trading in such security for regulatory reasons. The Exchange 
also proposes to amend section 202.06 of the Manual to provide guidance 
related to the release of material news after the close of trading on 
the Exchange.
    Section 202.06 of the Manual gives the Exchange authority to halt 
trading in a listed company's security under certain circumstances. 
Currently, the Exchange may impose a regulatory trading halt when a 
listed company announces material news \3\ shortly before the opening 
of trading on the Exchange or during the Exchange trading session 
(currently 9:30 a.m. to 4:00 p.m.). When that happens, the Exchange 
will typically institute a regulatory halt in trading, which halts 
trading on all market centers, to ensure full dissemination of the news 
to investors. The Exchange proposes to expand the hours and 
circumstances under which it can declare a regulatory trading halt.
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    \3\ The Exchange considers material news to be any news that is 
reasonably likely to have a material impact on the price or trading 
volume of a listed security.
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Regulatory Trading Halts
    Currently, section 202.06 of the Manual requires listed companies 
to notify the Exchange at least ten minutes in advance of releasing 
material news if such release will take place shortly before the 
opening of trading on the Exchange or during Exchange market hours (the 
``Material News Policy'').\4\ The Exchange proposes to amend section 
202.06 to require companies to comply with the Material News Policy 
between 7:00 a.m. and 4:00 p.m. Eastern Time. In the Exchange's 
experience, most companies release news related to corporate actions 
and other material events between 7:00 a.m. and 9:30 a.m. 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. However, because there is a lower volume 
of trading in such pre-market hours, the Exchange believes that a 
listed company is most well positioned to determine whether a trading 
halt is appropriate given the news it intends to release. Therefore, to 
facilitate an orderly opening and ensure thorough dissemination of 
material news, the Exchange believes it is beneficial to require 
companies to comply with the Material News Policy

[[Page 54363]]

and advise whether a trading halt is appropriate during pre-market 
hours.
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    \4\ At the time section 202.06 of the Manual was last amended, 
the Exchange had an off-hours trading session in which securities 
could be traded at Exchange closing prices after the Exchange's 4:00 
p.m. close until 5:00 p.m. As such off-hour trading session no 
longer exists, the Exchange proposes to amend Section 202.06 of the 
Manual to specify that the Exchange's market hours end at 4:00 p.m. 
Eastern Time.
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    As discussed above, when a listed company releases material news 
during the course of the trading day, the Exchange will typically halt 
trading temporarily to ensure full dissemination of the news. Under the 
proposed rules, between 7:00 a.m. and the opening of trading on the 
Exchange, the Exchange 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 (a ``Pre-Market 
Halt'').\5\ While trading on the Exchange does not begin until 9:30 
a.m. Eastern Time, trading (including trading in Exchange-listed 
securities) begins on NYSE Arca Equities, Inc., the Nasdaq Stock Market 
and other national securities exchanges at 4:00 a.m. Eastern Time. 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 such security 
until the Exchange lifts the halt.\6\
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    \5\ However, the proposed rule will state that if it appears 
that dissemination of material news will not be complete prior to 
the opening of trading on the Exchange at 9:30 a.m., the Exchange 
may temporarily halt trading solely in its own discretion in order 
to facilitate an orderly opening process. This is consistent with 
the Exchange's current practice.
    \6\ See, for example, NYSE Arca Equities Rule 7.18 and Nasdaq 
Stock Market Rule 4120(a)(2) for the authority to initiate a trading 
halt.
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    The Exchange notes that the volume of trading in the hours before 
trading begins on the Exchange is generally lighter and conducted 
predominantly by professional investors. Because of this reduced 
trading volume and the fact that the Exchange itself is not yet open 
for trading during these hours, the Exchange believes it is appropriate 
to institute a Pre-Market Halt only at the request of a listed company. 
The Exchange notes that the Nasdaq Stock Market (``Nasdaq'') has 
adopted a comparable rule with respect to trading halts between the 
hours of 7:00 a.m. and 9:30 a.m.\7\ Lastly, when a trading halt is 
implemented during Exchange market hours, NYSE Rule 123D specifies that 
a Floor Governor or two Floor Officials must approve the halt in 
trading. However, because a Pre-Market Halt will only be instituted at 
the request of a listed company and because Floor Governors and Floor 
Officials are not typically on the trading floor during pre-market 
hours, the Exchange proposes to include a statement that, 
notwithstanding anything to the contrary in NYSE Rule 123D(1), the 
approval of the Floor Governors or Floor Officials is not required for 
a Pre-Market Halt.
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    \7\ See, for example, Nasdaq Stock Market Rule 4120(a)(1) which 
applies between the hours of 4:00 a.m. and 9:30 a.m.
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    The Exchange proposes to further amend section 202.06 of the Manual 
to set forth circumstances in which it may institute a regulatory halt 
while it awaits information requested from a listed company. Section 
202.06 of the Manual currently limits the Exchange's authority to halt 
trading to situations when a listed company intends to release material 
news during market hours. However, in the Exchange's experience there 
are other scenarios when it may be advisable to halt trading for the 
protection of investors. For example, if there is uncertainty 
surrounding material news issued by a listed company or a company's 
compliance with the Exchange's continued listing standards, the 
Exchange believes it may be appropriate to halt trading while it 
gathers information to resolve such ambiguity. Accordingly, the 
Exchange proposes to amend section 202.06 of the Manual to state that 
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 Exchange may halt trading in such listed company's 
security until it has received and evaluated the requested information. 
The proposed change in this regard mirrors Nasdaq Stock Market Rule 
4120(a)(5).
    As discussed above, the Exchange believes that the release of 
material news immediately prior to the commencement of trading on the 
Exchange has the potential to cause significant volatility to the 
opening process. Similarly, material news released immediately after 
4:00 p.m. Eastern Time can interfere with the closing process. Although 
trading on the Exchange stops at 4:00 p.m. Eastern Time, 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 after 4:00 p.m. Eastern Time on other exchanges, if a listed 
company releases material news immediately after 4:00 p.m. Eastern Time 
there can be significant price movement on other markets when compared 
to the last sale price on the Exchange. The result, therefore, is that 
a DMM can be executing trades at the Exchange closing price while the 
same security is simultaneously trading on other exchanges at a very 
different price. As this discrepancy can cause confusion to investors, 
the Exchange proposes to include advisory text in section 202.06 of the 
Manual requesting that listed companies intending to release material 
news after the close of trading on the Exchange wait until the earlier 
of the publication of their security's official closing price on the 
Exchange or 15 minutes after the scheduled closing time on the 
Exchange.\8\ The Exchange proposes to specify that trading on the 
Exchange typically closes at 4:00 p.m. Eastern Time, except that on 
certain days trading closes early at 1:00 p.m. Eastern Time. As 
discussed in Footnote 4, above, the Exchange no longer has an off-hours 
trading session. Therefore, the Exchange proposes to delete obsolete 
text (marked with an asterisk) related to such session.
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    \8\ Although the Exchange typically closes at 4:00 p.m. Eastern 
Time, there are certain days each year when it closes at 1:00 p.m. 
Eastern Time. The phrase ``15 minutes after the scheduled closing 
time'' will account for these early closings.
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    Lastly, the Exchange proposes to amend section 202.06 of the Manual 
to state that it may halt trading in an American Depositary Receipt 
(``ADR'') or other security listed on the Exchange, when the Exchange-
listed security (or the security underlying the ADR) is listed on or 
registered with another national securities exchange or foreign 
exchange or market and such other exchange (or regulatory authority 
overseeing such exchange) halts trading in such security for regulatory 
reasons. The Exchange notes that Nasdaq has also adopted this practice 
under Nasdaq Stock Market Rule 4120(a)(4).
Additional Proposed Changes
    Section 202.06(C) of the Manual requires companies to release 
material news by the fastest available means. Pursuant to section 
202.06(A) of the Manual, listed companies can disclose such material 
news via any Regulation FD compliant method, including by filing a Form 
8-K with the Securities and Exchange Commission (the ``Commission''). 
Currently, section 202.06(C) includes advisory text on the best way to 
release material news to ensure immediate and widespread coverage. The 
Exchange believes that much of this advisory text is outdated as it 
refers to, among other things, the release of news by telephone, 
facsimile or hand delivery. Instead, the Exchange

[[Page 54364]]

proposes to include a concise statement that listed companies releasing 
material news should either (i) include the news in a Form 8-K or other 
Commission 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. The 
Exchange believes that distribution by either of these methods is 
consistent with current disclosure practices and ensures adequate 
dissemination. To make sections 202.06(B) and 202.06(C) consistent, the 
Exchange proposes to amend section 202.06(B) of the Manual to delete a 
reference to ``Dow Jones, Reuters and Bloomberg'' and replace it with a 
reference to the ``major'' news wires.
    The Exchange proposes to make a number of other non-substantive 
changes to sections 202.03, 202.04 and 202.06 of the Manual. In 
sections 202.03, 202.04 and 202.06(B)-(C), the Exchange proposes to 
delete the word ``representative'' after Exchange as listed companies 
do not have a designated Exchange representative to whom they should 
communicate in relation to material news.\9\ Similarly, in section 
202.06 of the Manual, the Exchange proposes to remove a reference to 
the ``specialist's book'' as such book no longer exists. Instead, the 
Exchange will include a reference to ``the Exchange.''
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    \9\ Currently, the Exchange's Market Watch team performs this 
function. However, as the official title of different groups 
occasionally changes, the Exchange believes it is appropriate to 
refer simply to ``the Exchange'' consistent with elsewhere in the 
Manual.
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    In section 202.06 of the Manual, the Exchange proposes to revise 
the section headings to accurately reflect the new rule text as 
described herein.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) \10\ of the Act, in general, and furthers the 
objectives of section 6(b)(5) of the Act,\11\ in particular in that it 
is designed to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
The Exchange believes that the proposed amendment is consistent with 
the investor protection objectives of section 6(b)(5) because it gives 
the Exchange greater flexibility to implement regulatory trading halts 
in a listed security when such halts may be necessary for the 
protection of investors. Specifically, the proposed rule change will 
alter the hours in which listed companies are required to comply with 
the Material News Policy such that the hours are from 7:00 a.m. to 4:00 
p.m. Eastern Time (rather than just shortly before the opening of 
trading on the Exchange and during the Exchange trading session, as is 
currently the case). The proposed rule change will also enable the 
Exchange to (i) implement a Pre-Market Halt at the request of a listed 
company when the company intends to issue material news between 7:00 
a.m. and 9.30 a.m. Eastern Time, (ii) halt trading when it believes it 
is necessary to request certain information from listed companies, and 
(iii) halt trading in an ADR or other Exchange-listed security when the 
Exchange-listed security or the security underlying the ADR is listed 
on or registered with another national securities exchange or foreign 
exchange or market and is halted on such other exchange or market for 
regulatory reasons. Further, the Exchange proposes to include a concise 
statement, in lieu of existing advisory text, that listed companies 
releasing material news should either (i) include the news in a Form 8-
K or other Commission 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. 
The Exchange believes that distribution by either of these methods is 
consistent with current disclosure practices and ensures adequate 
dissemination to the public. Additionally, the Exchange proposes to 
include advisory text in section 202.06 of the Manual requesting that 
listed companies intending to release material news after the close of 
trading on the Exchange wait until the earlier of the publication of 
their security's official closing price on the Exchange or 15 minutes 
after the scheduled closing time on the Exchange. The Exchange believes 
this change will eliminate confusion to investors when a DMM is 
executing a trade at the Exchange closing price while the same security 
is simultaneously trading on other exchange [sic] at a very different 
price. The Exchange believes that each of the proposed changes 
enumerated above are [sic] consistent with the investor protection 
objectives of section 6(b)(5) because they provide the Exchange with 
additional authority to halt trading in circumstances where material 
news that may impact trading is to be released by listed companies or 
has not yet been fully disseminated. The Exchange believes that 
material news is highly relevant to investors when deciding to buy or 
sell securities and thus providing the Exchange with additional 
authority to halt trading while such news is released and disseminated 
is protective of investors.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    In addition, the Exchange believes the proposed rule change is 
consistent with the protection of investors because it will specify in 
Exchange rules the scenarios in which a trading halt may be necessary, 
thereby promoting transparency in Exchange rules and making them easier 
to navigate. In giving the Exchange authority to declare regulatory 
trading halts in situations described herein, the proposed rule change 
enables the Exchange to act in the best interest of protecting 
investors.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that section 202.06 of the Manual, as 
amended, do [sic] not impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act. As 
discussed herein, the Exchanges [sic] proposed amendments to section 
202.06 of the Manual are designed to give the Exchange greater 
flexibility to halt trading in a particular listed security when the 
Exchange believes a halt is necessary or appropriate. Currently, 
section 202.06 of the Manual only permits the Exchange to implement 
regulatory trading halts for the dissemination of material news. As 
currently drafted, the Exchange believes these rules are unnecessarily 
restrictive and do not cover the full spectrum of situations where a 
trading halt may be necessary for the protection of investors. In 
addition, the Exchange believes that its proposed changes are 
consistent with the Nasdaq rules with respect to trading halts. For the 
foregoing reasons, therefore, the Exchange does not believe that such 
changes impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

[[Page 54365]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6)(iii) requires a 
self-regulatory organization to provide the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2015-38 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2015-38. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSE-2015-38 and should be 
submitted on or before September 30, 2015.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-22603 Filed 9-8-15; 8:45 am]
 BILLING CODE 8011-01-P