National Market System - NMS

What is a 'National Market System - NMS'

A national market system (NMS) is a system with two main functions:

1. To facilitate trading of OTC stocks whose size, profitability, and trading activity meet specific criteria.

2. To post prices for securities on the NYSE and other regional exchanges simultaneously, allowing investors to obtain the best price.

BREAKING DOWN 'National Market System - NMS'

The National Market System is sponsored by both the NASD and the Nasdaq. Compared to other OTC stocks, OTC stocks trading under the NMS system have a more comprehensive listing within newspapers.

RELATED TERMS
  1. Order Protection Rule

    One of the provisions of Regulation NMS that ensures that investors ...
  2. OTC Markets Group Inc.

    The owner and operator of the leading U.S. inter-dealer electronic ...
  3. Trade Through

    A stock market order that is not executed at the best possible ...
  4. Over-The-Counter Market

    A decentralized market, without a central physical location, ...
  5. Regulation NMS

    National Market System (NMS) is a set of rules passed by the ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context ...
Related Articles
  1. Markets

    What's an Over-The-Counter Market?

    The over-the-counter market is a decentralized market in which unlisted securities trade.
  2. Investing

    Penny Stocks: 3 Tips to Trade Over-the-Counter Stocks

    Discover some valuable tips to make investing in over the counter penny stocks more likely to be a profitable investment endeavor.
  3. Markets

    Trading Over the Counter

    OTC trades tend to be for smaller company stocks and debt securities. Debt securities such as bonds are generally traded by investment banks making markets for specific issues.
  4. Investing

    How To Play The OTC Pink Stocks

    The OTC Pink offers a variety of investment candidates including many good companies waiting to be discovered. Recently, the OTC Pink has worked hard to improve the service by tiering companies ...
  5. Investing

    Inside National Payment Systems

    Investopedia explains: The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
  6. Financial Advisor

    A Day In The Life Of A System Trader

    Systems traders divide their time between trading, developing, backtesting, optimizing and forward testing, to create viable and high-probability trading systems.
  7. Investing

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
  8. Investing

    Why You Should Understand The Stock Market

    Even if you don't invest a cent in stocks, you should still understand how the stock market works. Find out why.
  9. Managing Wealth

    Interpreting A Strategy Performance Report

    These key performance metrics will help you decide if your trading strategy is a winner.
  10. ETFs & Mutual Funds

    FOCPX: Overview of Fidelity OTC Portfolio Fund

    Learn about the Fidelity OTC Portfolio mutual fund, how the fund uses active management and the combination of smaller and larger allocations to find returns.
RELATED FAQS
  1. Where do I go to make an OTC (over-the-counter) transaction?

    Learn about the over-the-counter, or OTC, market and how to purchase its stocks. These stocks are often risky, but some offer ... Read Answer >>
  2. How do I buy an over-the-counter stock?

    The process of purchasing over-the-counter (OTC) stocks is different than purchasing stock from companies on the NYSE and ... Read Answer >>
  3. How does a company move from an OTC market to a major exchange?

    The over-the-counter market is not an actual exchange like the NYSE or Nasdaq. Instead, it is a network of companies that ... Read Answer >>
  4. What are the risks involved in OTC (over-the-counter) trading?

    Learn about the significant disadvantages and risks that are involved for investors seeking to trade in over-the-counter ... Read Answer >>
  5. Can investors short sell pink sheet or over-the-counter stocks?

    Short selling is an effective trading strategy that can be employed to hedge the risk of a loss on an off-setting position ... Read Answer >>
  6. Why are OTC (over-the-counter) transactions controversial?

    Learn more about over-the-counter transactions, and why OTC traders are considered riskier than traders working with larger ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center