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.

RELATED TERMS
  1. NASD Rule 2790

    A ruling passed by the National Association of Dealers (NASD), ...
  2. National Association Of Securities ...

    The NASD was a self-regulatory organization of the securities ...
  3. Trade Reporting And Compliance ...

    A program developed by the National Association of Securities ...
  4. Order Audit Trail System - OATS

    An automated computer system owned by the National Association ...
  5. Third Market

    Trading by non exchange-member brokers/dealers and institutional ...
  6. Compliance Registered Options Principal ...

    A supervisory and compliance position that FINRA required of ...
Related Articles
  1. Professionals

    Supervisory Systems

    FINRA/NASAA Series 26: Section 5 - Supervisory Systems
  2. Professionals

    Introduction

    FINRA/NASAA Series 26 Section 5 - Supervisory Systems. This section is the introduction to the chapter on supervisory systems.
  3. Professionals

    TAPE RECORDING EMPLOYEES

    Tape Recording Employees Certain firms may be subject to special supervision requirements if a significant amount of its registered agents came from a firm or firms that have been disciplined ...
  4. Professionals

    Written Supervisory Procedures

    FINRA/NASAA Series 26 Section 5 - Written Supervisory Procedures. In this section the OSJ and branch office definition, annual inspections and compliance meeting and outsourcing activities to ...
  5. Professionals

    THE ROLE OF THE PRINCIPAL

    Introduction The foundation of a firm’s supervisory system is its written supervisory manual, also known as the firm’s policy and procedures manual. All members are required to have ...
  6. Professionals

    B. Securities Industry Rules and Regulations

    The Maloney Act of 1938 was an amendment to the Securities Exchange Act of 1934 that allowed the creation of the NASD which now part of FINRA. The NASD became the self-regulatory organization ...
  7. Professionals

    B. NASD and Codes

    The National Association of Securities Dealers / NASD The Maloney Act of 1938 was an amendment to the Securities Exchange Act of 1934 that allowed the creation of the NASD which now part of FINRA. ...
  8. Professionals

    D. Compliance and the Patriot Act

    The foundation of a firm’s supervisory system is its written supervisory manual, also known as the firm’s policy and procedures manual. All members are required to have a policy and ...
  9. Professionals

    THE SECURITIES EXCHANGE ACT OF 1934

    Federal and state securities laws, as well as industry regulations, have been enacted to ensure that all industry participants adhere to a high standard of just and equitable trade practices. ...
  10. Professionals

    Prohibited Activities

    Prohibited Activities
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 >>
  6. What is the Central Registration Depository?

    The Central Registration Depository (CRD®) is an automated database used by the NASD and the NASAA to store and maintain ... 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