What is National Market System?

Legal Definition
The National Market System (NMS) is the national system for trading equities in the United States.

The System includes all the facilities and entities which are used by broker-dealers to fulfill trade orders for securities. This includes:

  • major stock exchanges, such as NYSE and Nasdaq.
  • a national central securities depositary for book-entry transfers (Depository Trust Company pursuant to Article 8 of the Uniform Commercial Code of New York State,
  • a depositary nominee (Cede and Company) to retain custody of stockholder rights with respect to immobilized jumbo stock certificates
  • a Proxy Ballot processing organization (Broadridge)
  • intraday clearing corporations which act as a central counterparty for continuing securities settlement by facilitating novation of settlement obligations to themselves and offsetting opposing obligations (known as netting or clearing). These organizations include FICC, NSCC, etc.
  • the facilities which operate the national price quotation system
-- Wikipedia
Legal Definition
Federal laws governing rule enforcement over licensing and regulating stock exchange securities trading. Refer to National Securities Market Improvement Act of 1996.