The National Market System (NMS) is a set of rules governing how stock exchanges interact with one another in order to provide the best possible price to investors.
The NMS was created in 1975 in order to make the U.S. stock market more efficient. It was designed to end the practice of "competitive quotation," in which exchanges would compete with one another to offer the best price for a stock.
Instead, the NMS requires exchanges to share their best prices with one another, so that investors can always get the best possible price for a stock.
The NMS is overseen by the Securities and Exchange Commission (SEC), which has the authority to make changes to the rules as it sees fit.
The NMS has been successful in making the U.S. stock market more efficient, but it has also been criticized for making it more difficult for new exchanges to enter the market.
What is a trade through exemption?
A trade through exemption is a regulatory exemption that allows a broker-dealer to trade a security on behalf of its customer at a price that is different from the best available price. The exemption allows the broker-dealer to trade the security at a price that is up to $0.05 better for the customer than the best available price. The exemption is only available for certain securities, including certain exchange-traded funds and certain equity securities.
What is a Reg NMS stock?
The Regulation National Market System, or Reg NMS, is a set of rules promulgated by the U.S. Securities and Exchange Commission (SEC) in 2007 to protect investors and promote fair and orderly markets. Reg NMS requires brokers to route orders to the venue that will provide the best execution for the customer. To that end, it establishes a national best bid and offer (NBBO) and prohibits "trading through" that price. It also promotes price competition by ensuring that all investors have access to the best prices through a process called "price/time priority." What was the original goal of Reg NMS and how did this law change markets? The original goal of Reg NMS was to create a more efficient and fair market for all investors by introducing new rules governing how brokers must trade stocks. This law changed markets by making it illegal for brokers to trade stocks on any exchange other than the one where the stock is listed.
What is Rule 605 Regulation NMS?
The Rule 605 of Regulation NMS is a rule that requires trading centers to publicly display the best-priced bids and offers for NMS stocks, and to disseminate information about trades of NMS stocks as soon as practicable.
The Rule is designed to improve the quality of information available to investors about the prices of NMS stocks and the circumstances under which trades are executed. In particular, the Rule is intended to:
(1) promote competition among trading centers by ensuring that investors have ready access to the best prices for NMS stocks;
(2) discourage trading practices that would tend to degrade the quality of the public price information or undermine the competitiveness of the national market system for NMS stocks; and
(3) help prevent investors from being misled by stale or otherwise inaccurate price information.
What is the sub penny rule?
The sub penny rule is a regulation that prohibits the trading of stocks at prices below $0.01 per share. This rule is designed to protect investors from being misled by abnormally low stock prices, which can be artificially inflated or manipulated. Sub penny stocks are often associated with high risks and scams, so the sub penny rule is meant to discourage investors from trading these stocks.