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  Rule 127

Rule 127. Block Crosses Outside the Prevailing NYSE Quotation

(a) A member organization that receives an order or orders for the purchase or sale of a block of stock, that may not readily be absorbed by the market, should explore in depth the market on the Floor. Unless professional judgment dictates otherwise, this should include checking with the DMM to ascertain the extent of the DMM's interest in participating at an indicated price or prices. The DMM should maintain the same depth and normal variations between sales as he or she would had he or she not learned of the block.

(b) A member organization that has a block of stock it intends to cross on the Floor at a specific clean-up price outside the current quotation may, when ready to effect the cross, proceed in the manner described below.

(i) The member organization should inform the DMM of its intention to cross a block at a specific price. There should not be any intervening trades other than transactions required to effect the block cross as required herein by the member organization representing the block order between the time it informs the DMM of its intention and the trade or trades to clean-up the block.

(ii) In order to effect a block cross at a clean-up price outside the current quotation pursuant to this paragraph (b), the member organization must: (a) trade with the Exchange best bid (offer), including all reserve interest at that price; (b) trade with all orders in the Display Book® system limited to prices better than the block clean-up price, including Floor Brokers' e-Quotes at a price that is the minimum variation (typically, one cent) better than the block clean-up price, and (c) crossing the block orders at the specified clean-up price. The block shall be entitled to priority at the clean-up price.

(c) Member Organization Positioning.

This paragraph shall apply to block transactions in which all or a part of one side of the block is for a member or member organization's own account.

(1) Establishing or increasing a position. If all or any portion of the block will establish or increase the member organization's position, the member organization representing the block orders must: (a) trade with the Exchange best bid (offer), including all reserve interest at that price and (b) crossing the block orders at the specified clean-up price. The member organization must fill at the clean-up price orders limited to the clean-up price or better before any amount may be retained for the member organization's account.

(2) Liquidating position. A member organization which is covering a short position or liquidating a long position must: (a) trade with the Exchange best bid (offer), including all reserve interest at that price; (b) trade with all orders in the Display Book® system limited to prices better than the block clean-up price, including Floor Brokers' e-Quotes at a price that is the minimum variation (typically, one cent) better than the block clean-up price, and (c) crossing the block orders at the specified clean-up price. The member organization is not required to fill at the clean-up price orders limited to the clean-up price.

(d) Reasonable Needs of the DMM

(1) After exploring the market and consulting with the DMM, the member organization should be prepared to fill the needs of the DMM in accordance with that conversation. The DMM cannot increase the amount which he or she initially indicated unless the member organization agrees or the market has changed substantially.

(2) If the member organization does not consult with the DMM, the member organization should make a professional estimate of the probable needs of the DMM and reserve an appropriate amount to fill such needs.

(3) If the DMM and the member organization representing the block orders disagree as to the extent of the needs of the DMM, they should consult with a Floor Official. As appropriate, it may be necessary for the DMM to trade with the offer side of the cross to ensure that his or her reasonable needs in maintaining an aftermarket are satisfied.

(e) The requirements of Rule 76 will not apply to executions made in accordance with this rule.

• • • Supplementary Material: ------------------

.10 Definition of a Block.—For the purposes of this Rule, a block shall be at least 10,000 shares or a quantity of stock having a market value of $200,000 or more, whichever is less, which is acquired by a member organization on its own behalf and/or for others from one or more buyers or sellers in a single transaction.

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(See also Rules 79A.30 and 97.)

Adopted: June 15, 1972.

Amended: February 10, 1976; effective March 3, 1976; December 15, 1994; June 18, 1997; August 1, 1997; October 5, 2006 (NYSE-2006-82); November 30, 2006 (NYSE-2006-73); October 24, 2008 (NYSE-2008-46); February 18, 2009 (NYSE-2009-13); March 22, 2010 (NYSE-2010-24).