Rule 390 financial definition of Rule 390
A former New York Stock Exchange rule that stipulated that, unless exempted by the exchange, members must receive permission before trading an exchange-listed security off the exchange floor. Rule 390 was scrapped in 2000 by the New York Stock Exchange under pressure from the Securities and Exchange Commission. Compare Rule 5
. See also Rule 19c-3
References in periodicals archive
Off-exchange trading The SEC also implemented only modest changes to another potentially anti-competitive feature of the securities markets, NYSE Rule 390. The rule proscribed NYSE members from trading NYSE stock off-exchange (in the third market) as principals.
The NYSE defended Rule 390 by claiming that it prevented the "cream skimming" of uninformed investors' orders; such cream skimming could impair market liquidity.
In December, the New York Stock Exchange agreed to eliminate Rule 390
, which prevented NYSE member firms from trading anywhere but on the Big Board.