5.3.  NMS vs. OTC Securities

Another way to divide up the securities industry is by regulatory framework. The first framework is called the National Market System (NMS), and it was established by the Securities Acts Amendments of 1975. The goal of the NMS was to consolidate the trading rules across all the exchanges and to encourage competition among them. This legislation required that U.S. exchanges be linked together, which created both the consolidated tape and the Consolidated Quotation System. The legislation also eliminated fixed commissions. Within the NMS framework, securities listed on the NYSE, Nasdaq, and the regional exchanges are defined as NMS securities. All trading of NMS securities is considered to be part of the NMS and subject to NMS regulations, even if they are traded over the counter.

The SEC later used this autho