NYSE Proposes Delay on End-of-Day Company Announcements
According to a notice posted Tuesday on the SEC website, the NYSE plans to prevent firms from issuing news releases for up to five minutes after closing time.
The move is a bid to protect NYSE’s closing auctions from sophisticated trading algorithms that scan English-language text in search of signals to buy or sell stocks. The auctions determine the end-of-day price for thousands of NYSE-listed stocks.
Sometimes companies release important news just after 4 p.m. but before the exchange has published their stock’s closing price. When that happens, it can lead to “significant investor confusion” and bursts of volatility, the notice said.
The NYSE’s proposed fix is needed in part because the 225-year-old exchange still runs an old-fashioned trading floor, with human traders called designated market makers, or DMMs, who oversee the closing auctions.
All-electronic exchanges such as Nasdaq can conduct the closing auction nearly instantly, but at NYSE it often takes longer. That is because DMMs can choose to close each stock manually or electronically.
Learn more HERE.