Nasdaq issues guidance related to compliance with Executive Order 13959
Nasdaq today issued guidance related to compliance with Executive Order 13959 for issuers of exchange traded products and closed-end funds.
Executive Order 13959 (EO 13959) of November 12, 2020 prohibits, beginning at 9:30 a.m. eastern standard time on January 11, 2021, any transaction by a United States person in publicly traded securities, or any securities that are derivative of, or are designated to provide investment exposure to, companies identified as of the date of EO 13959 as a Communist Chinese military company (CCMC).
This same prohibition applies to publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities, of companies identified after the date of EO 13959 beginning at 9:30 a.m. EST on the date that is 60 days after such identification. EO 13959 further permits purchases for value or sales solely to divest, in whole or in part, from securities held by any United States person, in accordance with timeframes specified in the Executive Order.
Nasdaq reminds its listed issuers, including issuers of closed-end funds and exchange traded products, of their obligation to comply with EO 19359. Nasdaq further reminds its listed issuers of their obligation to comply with the requirements related to the disclosure of material information in Listing Rule 5250(b)(1) and IM-5250-1.
In Nasdaq’s view, an issuer’s determination that a transaction in its listed securities would violate EO 13959 is material news that must be immediately disclosed to the marketplace in accordance with applicable Nasdaq rules, and as the listing market, Nasdaq would expect to halt trading in the listed security on all US exchanges based on that news.
Nasdaq would also halt unlisted trading privileges trading of securities halted by other listing markets, and halt options trading on any halted security.
Yesterday, NYSE issued an updated guidance on its actions to comply with Executive Order 13959.
On January 5, 2021, the Department of Treasury’s Office of Foreign Asset Control (OFAC) provided additional, specific guidance to the NYSE stating that U.S. persons cannot engage in certain transactions (as specified in EO 13959) in the ADRs of China Telecom Corporation Limited (CHA), China Mobile Limited (CHL), and China Unicom (Hong Kong) Limited (CHU) after 9:30 a.m. eastern standard time on January 11, 2021.
Accordingly, NYSE Regulation has announced that it will move forward with delisting the three issuers that was initially announced on December 31, 2020 to comply with U.S. law. NYSE will suspend trading in these issuers at 4:00 a.m. eastern standard time on January 11, 2021.