Taping Rule

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.

BREAKING DOWN '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.

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RELATED FAQS
  1. Do I need to be a U.S. citizen to sit for any NASD examinations?

    No. The National Association of Securities Dealers (NASD) does not require a candidate to be a U.S. citizen to sit for an ... Read Answer >>
  2. Do I have to reach a certain age before I can write an NASD exam?

    The National Association of Securities Dealers (NASD) does not stipulate that individuals must be a minimum age to write ... Read Answer >>
  3. My job with a member firm has recently been terminated and I do not want to write ...

    The National Association of Securities Dealers (NASD) states that if you become employed with another member firm within ... Read Answer >>
  4. I want to start my own brokerage company, how do I become a member of FINRA?

    Before you read on, note that the Financial Industry Regulatory Authority (FINRA), (previously the National Association of ... Read Answer >>
  5. If my employment with my current firm terminates relatively soon, do I have two years ...

    Yes. When your employment ends with the current firm, your registration with the Financial Industry Regulatory Authority ... Read Answer >>
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    The Central Registration Depository (CRD®) is an automated database used by the NASD and the NASAA to store and maintain ... Read Answer >>
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