Definition of National Association of Securities Dealers (NASD)

self-policing organization of brokers and dealers who handle over-the-counter (OTC) marketsecurities. The NASD functions principally along five lines: (1) it has developed a written code of fair practices dealing with such matters as the appropriateness of prices quoted to customers; (2) it has promulgated standard procedures in transactions between members; (3) it has improved the quality of service that the OTC market gives the investing public; (4) it undertakes to investigate and arbitrate disputes between parties and to take disciplinary measures when justified; and (5) it undertakes to study and make recommendations on pending legislation in the security field. It also owns and operates a computerized system providing price quotations for OTC and some exchange-listed securities. The system is known as NASDAQ, an acronym for National Association of Securities Dealers Automated Quotations system.