Last week, the SEC announced that it had issued an order granting temporary, conditional exemptive relief to Tokenized Securities Venues (TSV) from the definition of “exchange” to trade tokenized National Market System (NMS) stock using innovative permissioned automated market makers and liquidity pools. The order also grants a temporary, conditional exemption from the definition of “dealer” in the Exchange Act to certain liquidity providers that provide liquidity in tokenized NMS stock. I must admit that this is a word salad that I never anticipated writing during the course of my career!
The SEC’s Fact Sheet does a good job of untangling this knot of strange and mysterious words for old fogey securities lawyers such as myself:
Over the past several years, advancements in distributed ledger technology have facilitated innovations in trading across non-security crypto assets. Increasingly, market participants are seeking to buy and sell tokenized NMS stock using automated market maker (“AMM”) and liquidity pool distributed ledger technology. However, a TSV that trades tokenized NMS stock may face substantial challenges with complying with the Federal securities laws without potentially burdensome changes to its business model. TSVs and the use of distributed ledger technology can offer several benefits to market participants, including enabling investor self-custody, around-the-clock trading, fractional ownership of shares, and near instantaneous settlement, while improving efficiencies and providing greater transparency.
The order granting the exemptions – known as the “Innovation Exemption” – allows market participants to obtain the potential benefits of distributed ledger technology for trading tokenized NMS stock. Specifically, the order facilitates trading in tokenized NMS stock using distributed ledger technology while maintaining appropriate investor protections and fair and orderly market principles as the Commission further considers potential regulatory changes or other actions.
The Fact Sheet further notes that the exemptive relief is subject to a number of conditions, including:
– Tokenized NMS stock traded on a TSV is subject to limits on the number of symbols and volume traded;
– A TSV must verify that the tokenized NMS stock made available for trading on the TSV provides holders the same rights and privileges as does traditional NMS stock of an equivalent class;
– Before making available for trading tokenized NMS stock that is tokenized by an unaffiliated third party, the TSV must provide written notice and an opportunity to object to the issuer of the underlying NMS stock;
– Smart contracts used by a TSV must be auditable, public, and deployed on a public, permissionless distributed ledger; and
– A TSV must provide public notice about its operations, trading activities, and the trading activities of its affiliates on the TSV.
The exemptive order grants the subject relief for a period of five years and solicits public comment about possible modifications to the relief and potential next steps.
When I wrote about my shareholder proposal odyssey last month on the occasion of Corp Fin issuing an announcement that it would no longer consider Rule 14a-8 no-action requests, I was touched by how many folks reached out to me to share their own experiences with shareholder proposals, particularly as part of Corp Fin’s shareholder proposal task force. It reminded me yet again of how fortunate I am to be part of such a great “SEC family,” thanks to my shared experience with so many amazing folks who have worked (and continue to work) at the SEC. Thank you all for reaching out!
I noted at the time that I did not intend “my story of my shareholder proposal odyssey as an ode to the Staff’s now cast-aside no-action letter process – rather, it is dirge to an old friend that had outlived its usefulness.” Now, just a few weeks later, Rule 14a-8 faces its inevitable swan song, after the Commission proposed the rule’s rescission last week. The SEC’s proposing release was published in the Federal Register today, and the comment period will run until November 20, 2026.
I would say that the most frequent question that I have received since last Wednesday is: “Are you surprised that the Commission elected to take the drastic step of proposing to rescind Rule 14a-8 in its entirety?” To that question, I have answered “no,” as I think the handwriting has been on the wall ever since Chairman Atkins was appointed, given his longstanding antipathy toward the rule. Further, even before the political winds significantly shifted more than two years ago now, I argue that Rule 14a-8 was in a state of decline, as the proposals submitted under the rule veered toward the fringes of relevance to stockholders, while the Staff’s interpretations of key exclusions in the rule became more and more politicized. While Rule 14a-8 has certainly played an important role in the overall landscape of shareholder engagement, one cannot ignore the fact that its relevance and reliability has been tested in recent years.
The second most frequent question that I have received over the past five days is: “What happens next, assuming the SEC rescinds the rule?” In response, I think that it is worth noting that it seems unlikely that the Commission could act quickly enough to rescind Rule 14a-8 before the 2027 proxy season is upon us, given that the comment period for the proposing release runs until late November. This leaves us with the prospect of one last act for Rule 14a-8, once again without the involvement of the Staff in the exclusion process. As for the contours of that last act, I would definitely warn “buckle up,” because I don’t think that the usual shareholder proponents are the type to “go gentle into that good night!”
Once we get past the death throes of the 2027 proxy season and assuming that the Commission ultimately acts to rescind Rule 14a-8, there are numerous outcomes that we can anticipate. The rescission of Rule 14a-8 does not mean an end to shareholder proposals, just an end to relatively easy and costless shareholder proposals. Proponents seeking to advance their proposals at annual meetings will need to comply with company advance notice requirements and conduct their own solicitations, which will certainly add to the cost and complexity of pursuing a shareholder proposal. Much like what we saw in the aftermath of the mandatory proxy access debacle when the SEC adopted Rule 14a-11 (which was subsequently vacated by a federal court), “private ordering” could unfold following the rescission of Rule 14a-8 as companies could be strong-armed into facilitating proposals from shareholders in a manner similar to proxy access bylaws for director nominees. Further, we could see the states step up to the plate with legislation that could create processes similar to Rule 14a-8 (or taking different approaches) in order to fill the void left by a rescinded Rule 14a-8. It remains to be seen what exactly what those laws could look like and how such measures would interact with the federal regulation of proxy solicitations.
The third most frequent question that I have received since last Wednesday is: “What do you think the comment process will look like for this proposal?” On that front, I think we can all agree that there will be pointed comments on both sides of the debate, and the image that comes to mind is trench warfare from World War I. It seems likely that the shareholder side and the corporate side will retire to their respective trenches and there is unlikely to be any middle ground reached in the midst of the debate. While I hate to hear myself say this, I don’t think the comment process is going to be effective in swaying the Commission in any particular direction other than moving toward rescission, so in a way it seems like a pointless exercise at this juncture.
Finally, as we have seen with so many other rulemakings (including the aforementioned adoption of Rule 14a-11), the SEC’s actions on controversial rulemakings often end up being reviewed in the federal courts and one can certainly envision a scenario where the Commission’s effort to rescind Rule 14a-8 will find its way to the desks of U.S. Court of Appeals judges. In its proposing release, the Commission raises an interesting argument that the SEC’s authority over the proxy solicitation process is not as plenary as I was taught to believe, which in my mind could pull on a thread that threatens to unravel the entire sweater that is the SEC’s regulation of proxy solicitations. I will be breaking out the popcorn to watch how all of that plays out!
I am a decidedly Autumn person. My birthday is in October. I am a big fan of harvest activities – apple picking, pumpkin farm visits and gorging on apple cider donuts. I experience a sense of relief when football season returns. I enjoy viewing the dazzling show of Fall foliage, particularly when motoring with the top down on a crisp Autumn afternoon. My love of Halloween is well-documented in this blog. I may even occasionally indulge in a delicious pumpkin-spice latte. Even with all that, I must admit that I do feel a twinge of sadness and regret as the autumnal equinox approaches, marking our astronomical tilt into Fall. At my age, the summers start feeling more fleeting and precious, even though the weather is sweltering and the days are often packed with an endless stream of to-do lists and purportedly fun activities. Nevertheless, time relentlessly marches on, and we now find ourselves with October just around the corner.
The inevitable arrival of October means that our October Conferences are just three weeks away! Just in case you have been living under a rock for the past six months, our 2026 Proxy Disclosure Conference and the 23rd Annual Executive Compensation Conference will take place on October 12-13 in Orlando and via webcast. With all of the SEC developments that we cover every day in this blog, on our websites and in our publications, you will definitely want to join us in October for an in-depth discussion of where the experts expect things to go from here. You can also hear directly from the SEC Staff when I interview Corp Fin Deputy Director Christina Thomas on October 12 at the 2026 Proxy Disclosure Conference!
At the risk of sounding like a broken record, I encourage you to sign up for the Conferences today. You can register online or contact us at info@CCRcorp.com or 1-800-737-1271. I look forward to seeing you in October!
When I first heard of 24-hour equities trading, I had a bit of a panic attack, and I don’t think I was alone. Now that we’re getting closer to 23/5 trading, I understand and appreciate that the new overnight trading hours are really just an extension of existing pre- and post-market trading hours. And that does make me feel better because I’ve never gotten an emergency call at 5 am that a client’s stock price is changing on no news, even though “the tape is running” that early. (Hopefully, I am not an outlier?!)
But the feeling of panic is hard to shake. Thankfully, yesterday’s SEC Roundtable on Preparations for 24-Hour Trading was somewhat reassuring. Though it kicked off with Commissioner Peirce vocalizing my fears in her remarks, saying, “There are more fundamental human concerns, like sleep. Extended trading hours will amplify worries about a data feed going down at 3 am or social media rumors tanking your stock while your corporate office slumbers.” Thank you for making me feel seen and calling for this roundtable, Commissioner Peirce!
Here are my top takeaways from the three discussions (from my live notes):
1. 23/5 trading is 79 days away. U.S. exchanges, including the Nasdaq Stock Market, Cboe EDGX, NYSE Arca and 24X, are rolling out 23/5 trading on Sunday, December 6.
2. From 4 am to 8 pm ET, nothing changes. Dan Mathisson, of the SEC’s Division of Trading and Markets, Office of Analytics and Research, explained that the open and close of regular hours are the same. The closing price is the same. He sees no reason for current practices, like releasing earnings after the close of regular market hours, to change. (Though a panelist later noted that issuers may reconsider after-market disclosures if they start to cause undesired volatility overnight. More on that below.)
3. Trading hours are only going up 20%. Existing trading hours currently comprise 48% of the week. Under 23/5 trading, trading hours will comprise 68% of the week.
4. Near-continuous trading is already a reality. Some foreign markets and crypto exchanges operate continuously or nearly continuously. Even U.S.-listed equities have near-continuous trading, between existing pre- and post-market hours on U.S. exchanges and overnight equity trading in NMS stocks on Bruce Alternative Trading System (ATS), MOON ATS or Blue Ocean ATS, the three primary after-hours/overnight trading venues for U.S. equities. That overnight trading on ATSs has been around since 2021.
5. Existing overnight trading is slim but growing and will likely increase with the December 6 launch. In August 2026, just less than 1% of total NMS share volume traded in the overnight session on an average trade date, which reflected a 359% increase year‑over‑year. Overnight trading is dominated by foreign investors (37%). U.S. individuals are 9%, and U.S. institutions are only 7%. While institutional participation in overnight is very limited, institutions are very active from 4 pm to 8 pm. Retail participation is self-directed, not advisor-driven.
The hour with the heaviest overnight trading volume is the 8 to 9 pm window, which is the one hour the exchanges will be closed.
The overnight market (by volume) is mostly low-priced stock. Nine of the top 10 equities traded overnight by volume were subdollar stocks that were still NMS listed and mostly domiciled in Asia. (By dollar value, on the other hand, the top 10 more closely match the top 10 in the regular session.) See this memorandum from the Staff with data on NMS stock activity during the overnight trading session.
6. Large institutional investors and asset managers may initially not participate in overnight trading. BlackRock expects overnight trading to be predominantly led by retail and foreign investors and institutional activity to be event-driven or reactive in nature, so it will be monitoring overnight sessions for market quality and to see if sufficient liquidity develops for institutional-size order flow. December 6 is neither a “big bang” where everything changes, nor is it the end of the story, as market structure and participation will continue to evolve.
7. Preparing for 23/5 trading has promoted harmonization. The corporate action trading halt rules were cited multiple times as an improvement to current procedures and an important example of the harmonization that market participants are working towards so that overnight trading is subject to consistent rules and protections across venues.
8. Overnight hours will include Limit Up-Limit Down (LULD) protections. They’ll operate slightly differently in overnight trading. Trades can happen within a 20% price band, and orders will be rejected outside that band. Market participants plan to monitor this price band and compare it to existing pre-market hours beginning at 4 am, which do not have bands, to consider making these bands more dynamic. That’s because it’s expected that overnight hours will be used to trade around significant news events that come out after hours and there’s concern about limiting price discovery.
9. The main risk to public companies is volatility.Tim Quast from ModernIR, which focuses on supporting US-listed companies with quantitative analytics of equity market behavior, provided the sole perspective from the issuer community on any of the three panels. He expressed concerns that even the existing plan for a 20% band was not sufficient volatility protection from the issuer side. Even when there’s big news, he said, “you don’t want the crowd asleep.” He noted that the process would benefit from the LULD committee seeking the public company perspective.
10. There’s capital formation upside for public companies. The “optionality” of 24-hour trading that many panelists touted doesn’t apply to issuers, which will start seeing their stock trade overnight whether they want it to or not, but overnight trading does have the potential to bring new investors into a stock. The key will be liquidity and stability in overnight markets, as Tim Quast’s submitted comment letter notes.
Last October, Glass Lewis announced plans to change the firm’s approach to delivering advisory services, contemplating a move away from singularly focused research and vote recommendations based on a global voting policy toward providing multiple perspectives that reflect the viewpoints of clients. This August, Glass Lewis sent a message to clients outlining its proposed new approach for a multi-perspective framework and describing how it will solicit client comment.
On Wednesday, the proxy advisor announced that it has now opened a comment period on the four perspectives that will underpin its research beginning in September 2027 and is soliciting feedback from both institutional investor and corporate stakeholder groups.
As part of the comment period, Glass Lewis is making available on its website a consultation paper and survey questionnaire. The firm is also providing a companion paper that presents a comparison of the perspectives at the proposal category level. All survey responses may be submitted anonymously, and no individual or organization will be identified in the published findings. After the comment period closes on October 16, Glass Lewis will share the results on its website and, shortly thereafter, make available the market-specific guidelines across the four perspectives.
To give stakeholders ample time to understand and evaluate the new perspectives, Glass Lewis will continue to offer its Benchmark Voting Policy Guidelines and Proxy Paper research reports for the 2027 Proxy Season.
Updates to its Benchmark Voting Policy Guidelines for the 2027 proxy season will be released early next month.
I think I speak for our entire editorial team when I say that we’re really looking forward to seeing many new and familiar faces in Orlando at our Proxy Disclosure & Executive Compensation Conferences in a few short weeks! We hope many of our in-person attendees stop by and say hi during one or both of our networking events.
– On Sunday, October 11, from 4:30 to 6 pm ET, we’re hosting a welcome reception for PDEC attendees, speakers and sponsors.
– On Monday, October 12, starting right after our content ends and continuing until 7 pm ET, the National Association of Stock Plan Professionals (NASPP – our conference partner) is hosting the opening celebration for its annual conference. Stop by the CCRcorp booth in NASPP’s exhibit hall!
We don’t want our virtual attendees to feel left out – we want to hear from you too! Luckily, our conference platform has a group and direct chat feature. And, as always, please feel free to reach out by email.
The proposing release discusses the scope of the Commission’s authority under Section 14(a) of the Exchange Act and explains that Rule 14a-8 should be rescinded because it exceeds the Commission’s statutory authority. The Commission also has independent policy reasons for proposing to rescind the rule. First, many of the justifications that were originally provided to support adoption of Rule 14a-8 either have not been substantiated in practice or are less compelling today.
In addition, Rule 14a-8 also has had, and will continue to have, certain unintended consequences that further undermine any justification for retaining the rule:
Rule 14a-8 has become a mechanism for influencing the interactions between companies and their shareholders in ways that are inconsistent with the rule’s original purpose.
The existence of Rule 14a-8 places the Commission in the position of making judgments about the application of state law that are best left to other actors.
The presence of a federal rule has inhibited the development of state law and private ordering.
The proposal would also amend Rule 14a-4(c) to address the issues companies face related to discretionary authority when a shareholder proposal isn’t included in a company’s proxy statement, which may be more common after the repeal of Rule 14a-8. The proposing release says:
[I]f current Rule 14a-4(c)(2) were to remain in effect, more companies may feel compelled to include a proponent’s proposals in the company’s own proxy materials to obtain proxy voting authority from shareholders on the proposals [. . .] Under the proposed amendments, a proponent’s proxy card could include the company’s nominees, management proposals, and the proponent’s proposals, while the company’s card could solely include the company’s nominees and management proposals. The company could then exercise discretionary voting authority to vote proxies it receives against the proponent’s proposals, other than for proxy cards the company receives on which shareholders have checked the proposed [. . .] check box [. . .] that would provide shareholders an option to prohibit the company from exercising discretionary voting authority on proposals omitted from the company’s proxy card.
A proponent’s independent solicitation would no longer prevent the company from exercising discretionary voting authority over all proxies it receives. Instead, each shareholder would decide whether to allow the company to vote that shareholder’s shares on the omitted proposal.
Without Rule 14a-8, determining when companies must include shareholder proposals in their proxy materials would be left to state law and potentially companies’ governing documents, and “the transition period may be bumpy,” as Commissioner Peirce acknowledges in her statement. That’s because, as the fact sheet notes, “the presence of a federal rule has inhibited the development of state law and private ordering.” Gibson Dunn has discussed this in detail, saying “many state corporate law aspects of shareholder proposals remain unclear or unsettled,” including in Delaware, and different states may take different approaches.
As Goodwin notes, frameworks will eventually be developed governing “who may submit proposals, which matters are permissible for a shareholder vote in those proposals, and when inclusion in a company’s proxy statement is required” through private ordering and state law. Meanwhile, hearing words like “bumpy” and “unclear or unsettled law” makes me think of the Wild West. It may get worse before it gets better. Saddle-up!
The comment period will be open for 60 days following publication in the Federal Register.
Side note: We were pleased to see one of our blogs and remarks from the 2024 Proxy Disclosure & Executive Compensation Conferences cited in the discussion of Rule 14a-4(c). Special thanks to our former editorial colleague, Emily Sacks-Wilner,for pointing this out while I was still digesting yesterday’s fact sheets! She is so on top of things!
The SEC approved another proposal yesterday to modernize the proxy solicitation process that we had been expecting since it was submitted to OIRA. Here’s the 152-page proposing release and the 2-page fact sheet. The accompanying statement by Chairman Atkins also has an excellent summary of how the proposal would “modernize the rules to reflect technological advancements and changes in shareholder communications.”
– Annual Report to Security Holders. The Commission proposed to eliminate the requirement in Rule 14a-3 that a company must deliver a separate “annual report to security holders” even if it has already filed a Form 10-K. Today, shareholders receive essentially the same information from both the annual report required by Rule 14a-3 and the Form 10-K. Accordingly, the proposal would, if adopted, reduce costs to companies arising from preparing and delivering an annual report, without sacrificing investor protection and access to timely information.
– Incorporation by Reference Waiting Period. The Commission proposed to eliminate the requirement in Schedule 14A and Forms S-4 and F-4 to send a proxy statement or prospectus to shareholders at least 20 business days prior to the date of a shareholder meeting if the document incorporates information by reference. This 20-business-day requirement predates companies filing on EDGAR Schedule 14A, Forms S-4 and F-4, and incorporated documents. Today, this requirement no longer serves any investor protection considerations because shareholders can quickly and efficiently access those documents on EDGAR. The proposal would, if adopted, provide companies with greater flexibility in planning their shareholder meetings or business combination transactions, without sacrificing investor protection and access to timely information.
– Notice of Exempt Solicitation. The Commission proposed to eliminate the requirement in Rule 14a-6(g) for a shareholder owning more than $5 million of a company’s securities to submit on EDGAR a notice for its exempt solicitation with respect to that company. The notices no longer serve their intended purpose and, in recent years, the substantial majority of these notices have instead been submitted voluntarily by shareholders owning less than the requisite amount. The proposal would, if adopted, eliminate an unnecessary filing requirement and help ensure that EDGAR cannot be misappropriated to become a platform that prominently communicates views not required to be publicly disseminated, as such outcome may confuse shareholders and hinder their access to a company’s required filings.
– Broker Search Period. The Commission proposed to reduce Rule 14a-13’s timeframe for initiating a broker search in connection with a shareholder meeting from 20 business days before the record date to five business days. The current timeframe, which the Commission adopted in 1983, has become outdated with technological advancements. The proposal would, if adopted, provide companies with greater flexibility in planning their shareholder meetings, while continuing to ensure that companies accurately identify their beneficial owners for a shareholder meeting.
Comments on this proposal are also due 60 days from publication in the Federal Register.
New Senior Editor – Danielle Benderly. Since Peter retired a few years ago, I have been largely solo in drafting most of the content for Section16.net, at least the blogs and the answers to questions posted on the Q&A Discussion Forum and the “printed” Section 16 publications, which are accessible on the website. These publications include the Section 16 Forms and Filings Handbook and (for subscribers who choose to subscribe to it) the Section 16 Treatise and Reporting Guide. (Many other members of the CCRcorp team, of course, work behind the scenes to post content on the website and make sure it stays up to date.)
As the need to create more content and update publications accelerated in recent years, it became clear that we needed to expand our editorial bench to allow us to continue to add new content and update existing resources. At the same time, we needed creative minds to redesign the website to make it easier for practitioners to navigate to all of the resources on the website (or on a specific topic), without changing the depth, clarity, or timeliness of the content. To help undertake those efforts, I am pleased to announce that Danielle Benderly has joined me as a Senior Editor of Section16.net.
Section16.net and our various print and online publications have always been grounded in the knowledge that Peter and I developed through our initial research for our publications and the application of that knowledge in our practice. After that work in the early years, staying current and providing updated guidance on a timely basis was our primary objective, eventually leading to Section16.net. Danielle brings more of the same knowledge and the same objective. She has deep knowledge of Section 16 and related areas, including EDGAR (which has never been my strong suit), which she developed during her 30 years in private practice. She also shares our commitment to digesting complex rules (and staff interpretations) and lengthy court decisions into understandable, practical guidance. Danielle and I are continuing to try to provide a user-friendly roadmap for practitioners to access that guidance. (Coincidentally, Danielle also happens to be great at website design and has been spearheading the new look of the website, which, as discussed below, will be launched on September 21).
While Danielle has been working with me behind the scenes over the last year, going forward you’ll be seeing Danielle’s byline alongside mine as we continue to collaborate. Every blog, update, Model Form, and Q&A Forum response will reflect that collaboration. Unfortunately, despite my plan to present alongside Danielle for the Section 16 session at the upcoming NASPP conference in Orlando, regrettably I now am unable to attend, but Danielle will represent us well along with my usual co-presenter, Barbara Baksa, the NASPP’s Executive Director.
Updating Section16.net. Danielle has been a “superfan” of Section16.net and, as I said above, oversaw our revamping of the website to make it easier and more intuitive to navigate to our online resources. The key tools you have always relied on are exactly where they were — we just removed excess text and added better visual navigation tools. Members who want a more gradual transition can still access the “classic” version of our homepage through the end of 2026, but we think you will like the new look.
The revamped homepage will appear on Monday, September 21. After that, we expect to add improvements incrementally, likely every few weeks.
As always, all of us at CCRcorp appreciate our loyal subscribers.
So happy to have Danielle on the team, and can’t wait to use the revamped Section16.net homepage!
Public Service Announcement: In private practice, I was a long-time Section16.net subscriber and superuser, and at some point I realized I didn’t get updates from Alan Dye’s Section16.net Blog by email. If that’s you, here’s your PSA that you can sign up to get those blogs delivered directly to your inbox too!
One of the things that needs to be addressed as trading hours expand is how to handle corporate actions that have to be processed during a nontrading window. Over on Cooley’s CapitalXchange blog, Liz recently shared that Nasdaq was addressing this by expanding the mandatory trading halt framework that already exists for reverse stock splits – extending it to eight specified categories (changes to symbol/ticker or CUSIP, large dividends, splits, de-SPACs, spinoffs, security-type changes and mergers/similar share exchanges). She also noted that “[o]ther primary listing exchanges will implement substantially identical trading halt rules.” NYSE is now also out with a proposed rule change to address this, and the notice of filing and immediate effectiveness has been posted on the SEC’s website.
In the context of 23/5 Trading, the Exchange has determined—based on discussions both internal and with industry participants, including the other Primary Listing Markets—that, similar to reverse stock splits, certain other corporate actions require a clearly defined and transparent pause in trading to facilitate their coordinated processing by the Exchange and other market participants before orderly trading may resume in the affected security [. . .] Although the Exchange does not currently plan to extend its own trading hours, the Exchange is a Primary Listing Market whose listed securities may trade on any venue, including NYSE Arca and other exchanges that opt to offer 23/5 Trading. Under the current market structure, the Exchange processes corporate action-related changes and updates for its listed securities during overnight hours. Other market participants, including broker-dealers, likewise use that overnight period to process corporate action-related information and adjust quotes, orders, and related instructions accordingly.
Under 23/5 Trading, however, trading in the Exchange’s listed securities will resume on other markets at 9:00 p.m., only one hour after the close of trading at 8:00 p.m. Consequently, there will no longer be a substantial non-trading window during which the Exchange and market participants can process such corporate actions without potentially impacting overnight trading on other markets. These corporate actions require coordinated updates across Exchange and market-participant systems—including adjustments to orders, quotes, and related instructions—to ensure orderly trading and accurate pricing and execution in the affected security. With only a one-hour pause between trading days, neither the Exchange nor other market participants would have sufficient time to process and incorporate corporate action-related information—such as adjustments to systems, orders, quotes, and related instructions—without the risk that trading could occur in the affected security based on incomplete or inconsistent information [. . .]
The Exchange proposes to build on the framework established under Rule 7.18 for reverse stock splits by extending that rule’s mandatory regulatory halt requirement to additional corporate actions [. . .] As proposed, under 23/5 Trading, if a security is affected by any of the corporate actions enumerated in the proposal, the Exchange would implement a mandatory regulatory halt in that security before the start of overnight trading on other markets at 9:00 p.m. ET, and trading would resume with a Trading Halt Auction after 9:30 a.m. ET.
Similar notices of filing and immediate effectiveness have been posted for NYSE American, NYSE Arca and NYSE Texas. All would become operative at the commencement of 23/5 Trading. As John and Liz have noted, these changes will impact timelines, checklists and existing processes for corporate actions.
Reminder: The SEC’s roundtable on preparations for 24-hour trading is happening tomorrow from 10 am to 4 pm ET at the SEC’s headquarters and streaming live on SEC.gov.
