NYSE Gets Nod to Trade More Debt Securities—Brokers Rejoice Quietly
Published Date: 3/4/2025
Notice
Summary
The SEC approved the New York Stock Exchange’s request to update a special rule that lets certain unregistered debt securities trade on its bond system. Now, these debt securities can be traded if their company or parent company has stock listed on any national exchange, not just the NYSE. This change opens up more trading options without affecting costs or timing for traders and companies.
Analyzed Economic Effects
4 provisions identified: 3 benefits, 1 costs, 0 mixed.
More unregistered bonds can trade on NYSE Bonds
As of February 26, 2025, the SEC amended a prior order so that debt securities not registered under the Exchange Act may trade on NYSE Bonds if the issuer or the issuer's parent has a class of common or preferred equity registered under Section 12(b) and listed on any national securities exchange (not just the NYSE). This change amends and supersedes the November 16, 2006 exemption and expands which companies’ unregistered debt can be traded on NYSE Bonds.
Debt removed if related equity delists
The NYSE must monitor daily for delistings of an issuer’s equity (or the parent’s equity if the issuer is a wholly-owned subsidiary). If those equity securities are delisted, the NYSE must ensure the issuer’s debt securities no longer trade on NYSE Bonds to meet the exemption’s conditions.
May increase price transparency for bond investors
The SEC said the amended exemption could encourage more trading of debt securities on national exchanges and that, to the extent that happens, it may promote greater price transparency for those debt securities. That could give investors clearer access to trade prices and bid/ask information when those debts trade on NYSE Bonds.
NYSE must label and notify listed vs traded bonds
The NYSE must identify on its website and on NYSE Bonds whether a debt security is 'listed' or only 'traded', notify members before trading begins, publish a press release about the mixed trading, and obtain corporate action data from ICE Data Services. These steps aim to help market participants understand which debt securities are trading under the exemption.
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