NYSE Regulation reminds Floor brokers and Floor broker member organizations on the NYSE and Amex Equities, of the requirements of Exchange Rule 95, which governs both discretionary transactions and trading for the same account on both sides of the market at the minimum variation. DATE: April 24, 2012 TO: All Floor Brokers FROM: NYSE REGULATION SUBJECT: RULE 95 ____________________________________________________________________________________ I. Exchange Rule 95(a): Discretionary Transactions. Exchange Rule 95(a) governs which transactions a Floor broker may not exercise discretion.  The rule provides: (a) No member while on the Floor shall execute or cause to be executed on the Exchange, or through ITS or any other Application of the System, any transaction for the purchase or sale of any stock with respect to which transaction such member is vested with discretion as t:

(1) the choice of security to be bought or sold, (2) the total amount of any security to be bought or sold, or (3) whether any such transaction shall be one of purchase or sale.

The member must receive all material terms of an order, as referenced in (1), (2), and (3), from the member's customer off the Floor, and may not simply rely on a general understanding of the customer's intentions and thereby create an order or a material term of an order on the Floor.  For example, a member who has purchased stock pursuant to a customer's off-Floor order may not simply rely on an understanding of the customer's strategy to sell the stock if it becomes profitable to do so, but must first obtain a new order to sell entered by the customer from off the Floor.  See also Rule 90 and the supplementary material thereto. (b) The provisions of paragraph (a) of this Rule shall not apply to any transaction permitted by Rule 93 for any account in which the member executing such transaction is directly or indirectly interested. Failure to comply with Rule 95(a) may result in disciplinary action for violations not only of Rule 95, but also of Exchange Rule 90 and Section 11(a) of the Securities Exchange Act and rules thereunder. II. Exchange Rule 95(c): Trading at the Minimum Variation on both sides of the market for the same account. Exchange Rule 95(c) governs trading at the minimum variation on both sides of the market for the same account.  The Rule provides: (c) If a Floor broker acquires a position for an account during a particular trading session while representing at the same time, on behalf of that account, market or limit orders at the minimum variation on both sides of the market, the broker may liquidate or cover the position established during that trading session only pursuant to a new order (a liquidating order) which must be time-recorded upstairs and upon receipt on the trading Floor.  All liquidating orders as described above must be marked on the Floor as "BC" in the case of an order covering a short position, or "SLQ" in the case of the sell order liquidating a long position. Exchange Rule 95(d) defines what an "account" means for purposes of Rule 95: (d) For the purposes of this rule, an account shall be deemed any account in which the same person or persons is directly or indirectly interested.  A Floor broker representing an order to liquidate or cover a position, which was established during the same trading session at a time when the broker represented orders at the minimum variation on both sides of the market for the same account, must execute that liquidating or covering order before any other order on the same side of the market for that account. Failure to comply with Rule 95(c) may result in disciplinary action. III. Exchange Rule 95: Supplementary Material. Supplementary Material .10 to Rule 95 provides specified exceptions to the rule:

.10 The provisions of this rule shall not apply to (i) any order to liquidate a position carried over from a previous trading session; (ii) any order liquidating any part of a position assumed as part of a strategy relating to bona fide arbitrage; and (iii) any order liquidating any part of a block position assumed in reliance on the exemption for block positioners contained in Section 11(a)(1)(A) of the Securities Exchange Act.

Supplementary Material .30 to Rule 95 includes several examples of the types of buy and sell orders that a Floor broker may and may not represent for the same customer at the same time:

.30 The following examples indicate the types of buy and sell orders that a member may and may not represent for the same customer at the same time.

Note to Readers: Please view go to the original pronouncement to view the examples. To continue reading, go to:  [NYSE-Reg, Educ. Bulletin 12-4, 4/24/12].