The New York Stock Exchange and the NASD may have unveiled extensive guidance last week to clarify their rules on gift-giving and entertainment between company and client, but their advice really boils down to three words: use your head.

Answering a question that has vexed compliance officers and bar-hopping traders alike, the two trading exchanges ordered their member companies to devise, document and implement their own prudent policies—but left the exact definition of “prudent” to the companies themselves.

Despite the ambiguity, legal experts welcomed such a principles-based approach rather than a rules-based diktat that spelled out precisely what businesses had to ...