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. Pork Chop

    An arrangement on the floor of the NYSE whereby clerks cover ...
  2. Floor

    The lowest acceptable limit as restricted by controlling parties. ...
  3. Trading Floor

    The floor where trading activities are conducted. Trading floors ...
  4. Two Dollar Broker

    A floor broker who executes orders for other brokers who cannot ...
  5. Trading Ahead

    When a specialist trades securities for his or her own firm's ...
  6. Market Capitalization Rule

    A rule set by the New York Stock Exchange (NYSE) to determine ...
Related Articles
  1. Financial Advisor

    What Advisors Need to Know About Rule 3210

    Here's what advisors and brokers need to know about FINRA Rule 3210.
  2. Investing

    Corporate Bond Basics: Learn to Invest

    Understand the basics of corporate bonds to increase your chances of positive returns.
  3. Trading

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  4. 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.
  5. Investing

    The Basics Of Bonds

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

    Bond Buyers: Is Your Broker Overcharging You?

    Retail investors are at a disadvantage when it comes to buying bonds, because brokers don't have to disclose everything. That’s expected to change soon.
  7. Insights

    DOL Fiduciary Rule: Everything You Need to Know

    The Department of Labor (DOL) Fiduciary Rule expands the “investment advice fiduciary” definition under the Employee Retirement Income Security Act of 1974 (ERISA) and began to go into effect ...
  8. Investing

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  9. Investing

    An Introduction to Individual Bonds

    Individual bonds are better than bond funds and can be a key component to one’s investment strategy.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. Why are most bonds traded on the secondary market "over the counter"?

    Like stocks, after issuance in the primary market, bonds are traded between investors in the secondary market. However, unlike ... Read Answer >>
  4. What does membership in the New York Stock Exchange entail, and why is it known as ...

    Owning a seat on the New York Stock Exchange (NYSE) enables a person to trade on the floor of the exchange, either as an ... Read Answer >>
Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an ...
  4. Salvage Value

    The estimated value that an asset will realize upon its sale at the end of its useful life. The value is used in accounting ...
  5. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  6. Promissory Note

    A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on ...
Trading Center