Nine-Bond Rule

DEFINITION of 'Nine-Bond Rule'

The NYSE requirement that all orders for nine bonds or less be sent to the floor for one hour, in which time a market is sought. The rule doesn't apply if the customer directs the broker to go to the OTC market. Also known as "Rule 396".

BREAKING DOWN 'Nine-Bond Rule'

Because of the relative inactivity of bond trading on the NYSE (due to a number of factors including many of the listed bonds being traded OTC), this rule, which enables an order to stay on the floor for one full hour, was put in place to garner the best possible price for the individual investor.

RELATED TERMS
  1. OTC Markets Group Inc.

    The owner and operator of the leading U.S. inter-dealer electronic ...
  2. Floor Broker (FB)

    An independent member of an exchange who is authorized to execute ...
  3. Over-The-Counter Market

    A decentralized market, without a central physical location, ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context ...
  5. OTC Pink

    The lowest tier of the three marketplaces for trading over-the-counter ...
  6. Trading Ahead

    When a specialist trades securities for his or her own firm's ...
Related Articles
  1. Investing

    The Days of Rule 48 Are Coming to An End

    A look at the proposal to repeal the controversial Rule 48.
  2. Markets

    Getting To Know The Stock Exchanges

    Here are the answers to all the questions you have about stock exchanges but are too afraid to ask!
  3. Investing

    What is Rule 48?

    Rule 48 is a tool used by market operators to expedite trading in the opening hour, during periods of extreme volatility.
  4. Markets

    Corporate Bond Basics: Learn to Invest

    Understand the basics of corporate bonds to increase your chances of positive returns.
  5. Markets

    What's an Over-The-Counter Market?

    The over-the-counter market is a decentralized market in which unlisted securities trade.
  6. Markets

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  7. Investing

    How To Play The OTC Pink Stocks

    The OTC Pink offers a variety of investment candidates including many good companies waiting to be discovered. Recently, the OTC Pink has worked hard to improve the service by tiering companies ...
  8. Managing Wealth

    The Basics Of Bonds

    Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.
  9. Investing

    Penny Stocks: 3 Tips to Trade Over-the-Counter Stocks

    Discover some valuable tips to make investing in over the counter penny stocks more likely to be a profitable investment endeavor.
  10. Investing

    U.S. Corporate Bonds: The Last Safe Place to Make Money

    There aren't many other sources right now for relatively safe, steady income.
RELATED FAQS
  1. What are the SEC (Securities And Exchange Commission) rules about OTC (over-the-counter) ...

    Find out how the Securities and Exchange Commission and the Financial Industry Regulatory Authority regulate trades on the ... Read Answer >>
  2. How do I buy an over-the-counter stock?

    The process of purchasing over-the-counter (OTC) stocks is different than purchasing stock from companies on the NYSE and ... Read Answer >>
  3. Where do I go to make an OTC (over-the-counter) transaction?

    Learn about the over-the-counter, or OTC, market and how to purchase its stocks. These stocks are often risky, but some offer ... Read Answer >>
  4. Can a bond be traded over-the-counter?

    Bonds can be traded over-the-counter (OTC) and, in fact, the majority of corporate bonds that are issued by private and public ... Read Answer >>
  5. What are the risks involved in OTC (over-the-counter) trading?

    Learn about the significant disadvantages and risks that are involved for investors seeking to trade in over-the-counter ... Read Answer >>
  6. How does a company move from an OTC market to a major exchange?

    The over-the-counter market is not an actual exchange like the NYSE or Nasdaq. Instead, it is a network of companies that ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center