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.


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.

  1. Broker-Dealer

    A person or firm in the business of buying and selling securities, ...
  2. Registered Representative - RR

    A person who works for a brokerage company that is licensed by ...
  3. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  4. Series 7

    A general securities registered representative license administered ...
  5. Self-Regulatory Organization - ...

    A non-governmental organization that has the power to create ...
  6. Nasdaq National Market Securities ...

    The Nasdaq National Market consists of over 3000 companies that ...
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