Effective July 1, 2011, the NYSE and NYSE Amex amended Rule 1000 to set a different LRP value range for the first day of trading of an initial public offering.
Specifically, the Exchanges amended Rule 1000(a)(iv)(E) to provide that on the first day of trading of an IPO, the LRP value shall be the greater of $2.00 or the LRP value range that would be applicable based on the offering price of the IPO. The Exchanges had used the offering price of an IPO, as set by the investment bank syndicate the night before the first day of trading, to determine the LRP value range in that security. However, trading prices on the first day of an IPO can often be volatile, both compared to the offering price as well as intra-day. As a result, using the offering price to determine the LRP value range may be inconsistent with the actual trading prices, resulting in more frequent triggering of LRPs than is typical on the Exchange, thus unnecessarily limiting automatic execution of orders on the first day of trading. Accordingly, amended Rule 1000 now sets a minimum LRP value range of $2.00 for trading on the first day of an IPO.
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