Five percent rule

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Five percent rule

A rule of the National Association of Securities Dealers providing ethical guidelines for spreads created by market makers and commissions charged by brokers.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Five Percent Rule

1. An ethical guideline for FINRA members. While the rule does not impose any particular restrictions, it discourages dealers from having an excessive dealer's spread and brokerages from charging excessively high commissions.

2. An SEC rule stating that a person or organization must report buying or acquiring more than 5% beneficial ownership in any one equity stock.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved