What is National Association Of Securities Dealers ?

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The National Association of Securities Dealers (NASD) was a self-regulatory organization of the securities industry and a predecessor of the Financial Industry Regulatory Authority (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.

Definition

The National Association of Securities Dealers (NASD) was a self-regulatory organization responsible for overseeing and regulating the securities industry, particularly the Nasdaq Stock Market and over-the-counter markets. It also provided exams for investment professionals, such as the Series 7 exam.

Origin

NASD was established in 1939 to regulate the securities industry through self-regulation. In 2007, NASD merged with the regulatory arm of the New York Stock Exchange to form the Financial Industry Regulatory Authority (FINRA).

Categories and Features

NASD's main functions included regulating trading activities in the securities markets, ensuring market fairness and transparency, and providing certification exams for securities professionals. Its features included self-regulation and internal industry management.

Case Studies

Under NASD's regulation, the Nasdaq market rapidly developed into one of the largest electronic stock markets globally. Another example is NASD's management of the over-the-counter market, which helped improve market transparency and investor confidence.

Common Issues

Investors might misunderstand NASD's role, thinking it still exists. In reality, NASD has merged with other entities to become FINRA. Another common issue is the misconception about the Series 7 exam, which is now administered by FINRA, not directly by NASD.

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