TheCorporateCounsel.net

This Morgan Lewis memo provides a heads up about amendments to NYSE Rule 123D that address trading halts around reverse stock splits that will go into effect on Saturday, May 11th.  The amendments are being implemented to harmonize the NYSE’s rules with those of Nasdaq.  This excerpt from the memo describes the amendments:

The NYSE Amendments add new subparagraph (f) to Rule 123D, which provides that the NYSE will halt trading in a security for which the NYSE is the Primary Listing Market before the end of post-market trading on other markets on the day immediately before the market effective date of a reverse stock split. Such a trading halt due to a reverse stock split will be mandatory.

In connection with a reverse stock split, the NYSE has stated that it expects to initiate the halt at 7:50 pm EST, prior to the end of post-market trading on other markets at 8:00 pm EST, on the day immediately before the market effective date of the reverse stock split. Trading in the security will resume with a Trading Halt Auction starting at 9:30 am EST on the market effective date of the reverse stock split.

The memo says that the rule change was prompted by market participants’ concerns that allowing trading on an adjusted basis during early morning trading sessions could result in system errors or problems going unnoticed for a period of time when a security that has undergone a reverse stock split opens for trading with other thousands of securities.

– John Jenkins