Taping Rule

AAA

DEFINITION of 'Taping Rule'

A rule created by the National Association of Securities Dealers (NASD) that requires that special supervisory procedures be put in place when a specific percentage of a firm's employees are hired from brokers/dealers that have been expelled or have had their registration revoked because they breached trading regulations.

INVESTOPEDIA EXPLAINS 'Taping Rule'

The percentage that is used to determine whether the supervisory procedures need to be enacted depends on the size of the firm - it ranges from 40% for a small firm to 20% for a large firm. The supervisory procedures involve recording all of the telephone conversations made between registered employees and both potential and existing customers for three years. There are currently 25 firms that are recognized by the NASD as disciplined firms.

RELATED TERMS
  1. Self-Regulatory Organization - ...

    A non-governmental organization that has the power to create ...
  2. Registered Representative - RR

    A person who works for a brokerage company that is licensed by ...
  3. NASD Rule 2790

    A ruling passed by the National Association of Dealers (NASD), ...
  4. Registered Options Principal - ...

    An employee at a brokerage firm that is responsible for supervising ...
  5. National Association Of Securities ...

    The NASD was a self-regulatory organization of the securities ...
  6. Nasdaq National Market Securities ...

    The Nasdaq National Market consists of over 3000 companies that ...
Related Articles
  1. Getting To Know The Stock Exchanges
    Options & Futures

    Getting To Know The Stock Exchanges

  2. Fee-Based Brokerage: Will They Work ...
    Investing

    Fee-Based Brokerage: Will They Work ...

  3. Brokers and Online Trading
    Options & Futures

    Brokers and Online Trading

  4. Six Things Bad Financial Advisors Do
    Investing Basics

    Six Things Bad Financial Advisors Do

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center