Warrior Trading Blog

National Association of Securities Dealers (NASD) Definition: Day Trading Terminology

National Association of Securities Dealers

The National Association of Securities Dealers, or NASD, was the regulatory agency charged with overseeing the operation of the NASDAQ stock exchange and various over-the-counter (OTC) markets.

The National Association of Securities Dealers also oversaw the examination and licensing of various investing professionals, such as the series 7 exam.

In 2007 the National Association of Securities Dealers was merged with the Financial Industry Regulatory Authority (FINRA).

Financial Industry Regulatory Authority (FINRA)

The Financial Industry Regulatory Authority, or FINRA, operates in a similar way to how the National Association of Securities Dealers used to operate.

FINRA is an independent regulatory authority charged with overseeing the operation of all stock markets in the United States of America. It also oversees all brokerage firms, securities representatives and branch offices that operate in America.

FINRA operations are overseen by the Securities and Exchange Commission (SEC), and it is empowered to enforce SEC regulations for the finance industry.

Part of these operations include the licensing of a wide variety of financial professionals, which is done in conjunction with the SEC and according to SEC rules and standards. This responsibility also includes relevant professional seminars and on-going education and examination to ensure professional standards.

FINRA is also charged with mediating any financial disputes using a standard dispute-resolution system.

When financial agents or institutions have legal or contractual disputes, they are encouraged to settle the matter using FINRA dispute-resolution guidelines and mechanisms before resorting to costly and often acrimonious legal battles.

Trading, NASD and FINRA

Day traders are significantly affected by the rules and regulations that are developed and enforced by bodies like the National Association of Securities Dealers, the Financial Industry Regulatory Authority and the Securities and Exchange Commission.

The requirements for opening a brokerage account, the requirements for day trading stocks and other securities, the clearance and reporting standards for traders: these are just some of the examples of the rules that profoundly shape how traders behave in the market.

It is important to have a deep knowledge and understanding of the relevant rules and regulations that will affect how traders behave in the market. Not only do these rules makes some actions restricted or even illegal, but these rules shape the development and execution of trading strategies according to the limitations that they impose on traders.

In addition, traders should make an effort to stay abreast of changing rules and regulations that will affect them. These regulatory bodies, such as the National Association of Securities Dealers, do not often change the rules that govern day traders, but when they do the changes are often sudden and dramatic.

New regulations can drastically alter the shape of the market for day traders, and it is important to know well in advance when these changes are going to happen.

Final Thoughts

The National Association of Securities Dealers was a key regulatory body in the American markets before it was merged with the Financial Industry Regulatory Authority to become the main market overseer in America.

The same basic rules and functions of the original National Association of Securities Dealers live on today, and it is important for day traders to know and understand the rules and regulations of these bodies and to keep abreast of any changes that may take place.