October 8, 2015

NYSE’s New “Material Information” Policy: What to Do Now

Last week, I posted a poll to see how folks were reacting to the NYSE’s new “release of material information” policy. The poll results show that 27% of companies plan to make earnings announcements before 7 am – while 35% will do so after 4 pm (25% said they’ll make them when they want). In addition, I got this note from a member:

We talked to the NYSE’s “Market Watch” team yesterday and confirmed that while the decision whether to halt prior to 9:30 in connection with the issuance of material news is made by the company, the determination as to whether the news is actually “material” will be made by the company and the Market Watch team together – and the NYSE won’t implement a pre-market halt unless the Exchange Staff agrees with the company’s own materiality assessment. As a result, the factors that are relevant to whether an earnings release is material would be jointly considered by the company and the NYSE. In determining whether to halt trading, the NYSE asks that companies consider whether earnings are coming “near expectations” or whether there is a big beat or miss. So the NYSE will halt between 7:00 and 9:30 if (1) the company and the NYSE agree that the news is material and (2) the company requests a halt. If those two conditions are met, the NYSE will halt trading.

There is no change to practice during trading hours. Remember that the NYSE doesn’t halt a stock after news has been issued, so trading volatility after 9:30 in response to a release issued before the NYSE opens would never give rise to a halt. The only situation that perhaps the NYSE would halt trading in those circumstances would be if it was clear that the original earnings release was inadequate and either misstated or omitted material information and an additional release was necessary.

The NYSE Proposes to Significantly Increase Its Annual Listing Fees

Recently, the NYSE filed a proposed rule change with the SEC to amend the NYSE Listed Company Manual effective January 1, 2016 to increase annual listing fees. As noted in this Fried Frank memo, the minimum annual fee for a company’s primary class of equity securities is currently the greater of $45,000 or $0.001 per share. The proposed hike would increase the minimum annual fee to the greater of $52,500 or $0.001025 per share – roughly a 17% increase. For example, a company with 100 million shares of its primary class of equity securities will pay an annual fee of $102,500 per year in 2016.

Transcript: “Evolution of M&A Executive Pay Arrangements”

We have posted the transcript for our webcast: “Evolution of M&A Executive Pay Arrangements.”

– Broc Romanek