TheCorporateCounsel.net

With Nasdaq and NYSE’s moves to 23×5 trading set to kick off next month, this Skadden memo offers guidance for public companies on issues they should keep in mind. This excerpt discusses the potential implications of 23/5 trading on insider trading and other corporate policies:

Consider whether existing insider trading policies and trading window procedures require amendment in light of the new overnight session. For companies listed on the New York Stock Exchange, whose policies are tied to the preserved Core Session (9:30 a.m. to 4 p.m. ET), the overnight session may require little or no policy change. For Nasdaq-listed companies, the consolidation of pre-market, regular and post-market hours into a single Day Session (4 a.m. to 8 p.m. ET) may shift the meaning of policy terms like “market hours,” “market close” and “trading day.” Those companies should consider whether their insider trading policies and trading windows should reference specific hours rather than exchange-defined sessions.

Nasdaq-listed companies also should consider reviewing other corporate policies and equity plans that reference exchange-defined sessions, which may have shifted under Nasdaq’s consolidated two-session structure. For instance, it may be advisable for companies to clarify how certain aspects of
their equity plans or policies will be interpreted in light of 23×5 trading, particularly for Nasdaq-listed companies’ equity plans that reference exchange-defined sessions (e.g., using “closing
sales price” in the Fair Market Value definition).

Other issues that the memo says public companies need to consider include the implications of longer trading days for disclosure practices, including press releases and SEC filings, whether definitional provisions in contractual arrangements need to be modified for the new environment, and how extended trading hours may impact the way capital markets transactions are structured.