Stock Exchange Disclosure Requirements

The New York Stock Exchange has disclosure rules to ensure fair trading.

The New York Stock Exchange, or NYSE, is one of the largest stock markets in the world. When companies want to raise capital, they sell shares, which are traded on the NYSE. To ensure that no investors have a trading advantage over others, the NYSE has rules, including those that insist on disclosure of financially sensitive information, which might affect investor share buying and selling decisions. For example, if the board of directors of a company know of an impending offer to buy the company, they must disclose that information before buying shares in the company on their own account.

Control Relationship With Issuers

When a company, which is a member of the NYSE, is involved in selling shares issued by a company under its control, the NYSE member company must disclose this information to any prospective buyers of the shares. The member company must disclose the information, even if it is advising an investor intending to sell shares. If the NYSE member company is actually controlled by the company issuing shares, this information must also be disclosed to prospective buyers or sellers of the shares, according to rule 2262 of the NYSE rules.

The disclosure information does not have to be given in writing prior to a trade, but can be delivered orally. However if it is delivered orally, prior to the trade, it must be backed up with a written disclosure at or before the completion of the transaction.

Securities Arbitrator Disclosure

When customers of an NYSE member company are making a contested claim against a member company, the claim may be decided by NYSE arbitrators. Under NYSE rule 608, the director of arbitration must supply both of the parties involved in a claim that is going to be decided by arbitration, with the names and 10-year employment history of the arbitrators who are going to decide the case. The information supplied must also contain information disclosed by the arbitrators under rule 610. Arbitrators must disclose any financial interest they may have in the outcome of the case, and any family or historic interest they may have or have had with any of the parties involved in the claim. Rule 610(c)(a) further states that arbitrators must make these disclosures, even after the case has begun; if new information comes to light, it must be disclosed under rule 610.

Disclosure of Contributions to Tax-Exempt Organizations

An NYSE rule change came into effect on Jan. 1, 2010, concerning where listed companies may disclose information that must be made available to the public as a requirement for listing the company's shares on the NYSE. Rule 303A.02(v) states that when a company with shares listed on the NYSE makes contributions to tax-exempt organizations, such as charities, the company must disclose this information on its website, or in its annual report, if any of the company's independent directors serve on the executive committee of the tax-exempt organization.

References

• NYSE Rules: Rule 2262 Disclosure of Control Relationship With Issuer
• NYSE Rules: Rule 610 Disclosures Required of Arbitrators
• NYSE Rules: Rule 303A Corporate Governance Standards

Resources

• NYSE Rules: Search the Rulebook