What was the 'National Association of Securities Dealers (NASD)'

The National Association of Securities Dealers (NASD) was a self-regulatory organization of the securities industry and a predecessor of FINRA. It was responsible for the operation and regulation of the NASDAQ stock market and over-the-counter markets. It also administrated exams for investment professionals, such as the Series 7 exam. The NASD was charged with watching over the NASDAQ’s market operations. In 2007 it was merged with regulation, enforcement and arbitration arm of the New York Stock Exchange to form the Financial Industry Regulatory Authority (FINRA).

Breaking Down 'National Association of Securities Dealers (NASD)'

The NASD was founded in 1939 and was active in provisions to the Securities Exchange Act of 1934. It was also the leading founder of the NASDAQ stock market, which was established in 1971. Operating as an overseer of stock market operations for market activity and the NASDAQ under the overall supervision of the Securities and Exchange Commission (SEC), the NASD played a leading part in the management of stock trading in the market from 1939 to 2007. In 2007, it merged with the New York Stock Exchange's (NYSE) regulation committee to form FINRA.

National Association of Securities Dealers: Change to FINRA

FINRA is an independent regulatory entity that functions similar to its NASD predecessor and oversees all stock market operations in the United States. Its functions include the oversight of all brokerage firms, branch offices and securities representatives. FINRA is monitored by the SEC and sanctioned to enforce the rules and regulations of the SEC.

It provides for and facilitates the licensing of securities representatives dealing in all aspects of the market. Its licensing requirements are developed in conjunction with the regulations and oversight of the SEC. Leading required FINRA licenses include the Series 3, 6 and 7. In addition to licensing for individuals and firms, FINRA also provides ongoing educational seminars and monitors individuals and firms active in the financial markets for regulatory compliance.

National Association of Securities Dealers: FINRA Regulatory Role

As the leading regulatory entity in the securities markets, FINRA manages the market’s Central Registration Depository (CRD), which includes records of securities activity for all firms and securities representatives trading in the market. FINRA is also the lead arbitrator for all financial market trading disputes. In the financial markets, arbitration is the leading procedure for resolutions in dispute between entities and trading representatives. FINRA facilitates arbitration proceedings, which are similar to formal court cases but have lower costs. FINRA arbitration panels are responsible for issuing final rulings on arbitration cases.

FINRA collaborates with the North American Securities Administrators Association (NASAA), which oversees the licensing requirements of three key market licenses including the Series 63, 65 and 66.

RELATED TERMS
  1. Financial Industry Regulatory Authority ...

    The Financial Industry Regulatory Authority (FINRA) is a regulatory ...
  2. Securities Industry Regulatory ...

    The Securities Industry Regulatory Authority (SIRA), now called ...
  3. NASD Rule 2790

    NASD Rule 2790, now FINRA Rule 5130, was enacted in March of ...
  4. Corporate Financing Committee

    The Corporate Financing Committee is a FINRA advisory committee ...
  5. Series 6

    The Series 6 is a securities license entitling the holder to ...
  6. FINRA BrokerCheck

    FINRA BrokerCheck is a free, online tool that helps individuals ...
Related Articles
  1. Insights

    FINRA: How It Protects Investors

    Find out the history of FINRA, and how it's organized to monitor the markets and protect investors.
  2. Financial Advisor

    Why Financial Advisor Background Checks Are Vital

    An alliance of public interest groups is pressuring FINRA to broaden its BrokerCheck tool.
  3. Financial Advisor

    Becoming A Registered Investment Advisor

    To become a registered investment advisor requires specific licensing, qualifications and regulations, but the greater freedom may be worth it.
  4. Financial Advisor

    Breaking Down Financial Securities Licenses

    Find out which exam you need to begin your career as an investment professional.
  5. Tech

    Robo-Advisors Face Regulatory Scrutiny

    FINRA and other regulators are starting to put robo-advisors under a microscope. Here's what they are focusing on.
  6. Trading

    Get To Know These Crucial US Options Market Regulations

    How are options regulated in the U.S and which organizations are involved in options market regulations?
  7. Financial Advisor

    What Does an "Unsuitable” Variable Annuity Look Like?

    FINRA recently levied fines on a number of firms because they sold variable annuities that the regulator considered to be unsuitable.
  8. Financial Advisor

    FINRA Rule 2273: Your Recruiting Questions Answered

    An in-depth look at and Q&A on FINRA's new recruiting practices rule, which goes into effect in November.
  9. Investing

    What Is a Broker-Dealer and Why Should You Care?

    Before deciding who to use for help with your investing, learn what brokers, dealers, and broker-dealers are and what services they provide.
  10. Insights

    SEC Brings Record Number of Enforcement Cases

    The SEC has brought a record number of enforcement cases in its most recent fiscal year.
RELATED FAQS
  1. How does FINRA differ from the SEC?

    Discover how Securities and Exchange Commission (SEC) is different from the Financial Industry Regulatory Authority (FINRA) ... Read Answer >>
  2. What are my options if I fail my Series 63 exam?

    Find out what options are available to a person who has failed the Series 63 exam, a test that many states require for licensing ... Read Answer >>
  3. Do financial advisors have to be licensed?

    Understand why all financial advisors have to be licensed, and identify the specific licenses you must obtain to carry out ... Read Answer >>
  4. What possible past activities will prevent me from becoming a Registered Representative?

    There are several events that could either prevent a person from becoming a Registered Representative, or that will result ... Read Answer >>
  5. What qualifies a person as a day trader?

    As of Sept 28, 2001, the NASD (now, FINRA) and NYSE amended their definitions of day traders. A new term that they use is ... Read Answer >>
Hot Definitions
  1. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  2. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  3. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  4. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  5. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  6. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
Trading Center