The New York Stock Exchange said it filed a rule change with the Securities and Exchange Commission that allows it to take orders in special cases, after the normal 4:30 p.m. cutoff time.
The exchange – a self-regulatory organization — said it was amending Rule 123C(9)(a)(1)(ii) to delete the requirement that orders cannot be taken after 4:30 p.m. on a conventional trading day or 30 minutes after the close in a shortened trading session.
The change, which takes immediate effect, according to a NYSE filing with the SEC, would only be invoked “to resolve an extreme order imbalance that may result in a price dislocation at the close” of a trading session, otherwie.
“The Exchange believes it is appropriate to delete the bright-line cut off time because it hinders the ability of the Exchange to ensure a fair and orderly close” in “particular circumstances,’’ the NYSE said, in its filing.
The exchange cited two instances where resolving imbalances went past the “bright line” cutoff time, in support of deleting the requirement.
On Friday, September 21, 2012, the exchange said, a buy imbalance in Weatherford International shares could not be satisfied by sell orders on its trading book. The exchange solicited interest from market participants on and off its trading floor, to offset the imbalance. The Exchange’s two solicitations of interest were sent at 4:22 p.m. and 4:28 p.m., with the order acceptance cut-off time set at 4:35 p.m., which was past the official cutoff time.
The exchange, in that case, “was able to attract sufficient sell-side interest to offset the buy imbalance and the stock was closed shortly thereafter on a transaction of 7.822 million shares, unchanged from the last sale price of $13.54.”
Also, on February 12, 2010, heavy trading in in Berkshire Hathaway Class A and B securities led the exchange to take an unusual approach to closing trading in the shares.
The exchange decided to close trading in the B shares, before the A shares. That resulted in an imbalance of shares eligible for the closing of A shares. A solicitation of interest did not go out until 4:27 p.m. The exchange, as a result, accepted orders past the 4:30 p.m. cutoff.
