According to the rule of the three sames, what are the essential characteristics of a transaction?

According to the rule of the three sames, what are the essential characteristics of a transaction?

• A. Same price, same stock, and same transaction
• B. Same buyer, same seller, and same amount
• C. Same commission, same market, and same execution
• D. Same regulatory body, same stock exchange, and same timeframe

Answer: (A)

The concept of the "rule of the three sames" is fundamental in ensuring fairness and consistency in trading transactions. The correct answer highlights that for a transaction to be deemed comparable or identical, it must involve the same price, for the same stock, and the same transaction details.

When all three characteristics match, it ensures that the conditions under which the trades are made are equitable. This prevents unfair manipulations and promotes transparency, benefitting all market participants. For example, if multiple transactions occur at varying prices for the same stock, it could indicate disparities that might arise from unequal information access or other unfair trading practices. Thus, focusing on the same price, same stock, and same transaction is crucial for maintaining the integrity of the market.

The other options refer to different aspects that do not align with the core definition of the rule. While they may involve important elements of trading, they do not encapsulate the essence of transaction comparability as clearly as the correct answer. Understanding these characteristics helps reinforce the importance of honest trading practices and the significance of maintaining uniform conditions in financial transactions.