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. Professionals

    Exchange Market Structure

    CFA Level 1 - Exchange Market Structure. Contrasts the call and continuous market structures. Showcases the structural differences between regional, national and OTC markets.
  2. Professionals

    Over-The-Counter (OTC) / Negotiated Markets

    FINRA Series 6 Exam Study Guide - Over-The-Counter (OTC) / Negotiated Markets. In this section: Market Makers who are OTC dealers, buy and sell a minimum number of shares of a specific security ...
  3. Trading Systems & Software

    Trading Systems: Designing Your System - Part 1

    The preceding section of this tutorial looked at the elements that make up a trading system and discussed the advantages and disadvantages of using such a system in a live trading environment. ...
  4. Trading Systems & Software

    What's an Over-The-Counter Market?

    The over-the-counter market is a decentralized market in which unlisted securities trade.
  5. Professionals

    Sources of Information

    Sources of Information
  6. Investing Basics

    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 ...
  7. Investing

    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.
  8. Professionals

    The National Association of Securities Dealers Automated Quotation System (Nasdaq)

    FINRA Series 6 Exam Study Guide - The National Association of Securities Dealers Automated Quotation System (Nasdaq). Deals with types of security issues and stock quotation service levels
  9. Economics

    Inside National Payment Systems

    Investopedia explains: The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
  10. Trading Systems & Software

    Trading Systems: What Is A Trading System?

    A trading system is simply a group of specific rules, or parameters, that determine entry and exit points for a given equity. These points, known as signals, are often marked on a chart in real ...
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. 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 >>
  4. 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 >>
  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. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center