five-percent rule

five-percent rule

A National Association of Securities Dealers rule that requires its members to use ethical and fair standards when setting commissions and establishing quotation spreads. Although members may set markups and markdowns in excess of 5%, they must be able to justify the commissions and spreads if complaints are filed.
References in periodicals archive ?
Disclosure filing under the "five-percent rule": end-Jun, 2006 Influence on Investment only Total management Domestic Investors 1,522 634 2,090 Foreign Investors 87 238 307 Total 1,609 872 2,397 (1) (1.) Figures for the total may not add up because of overlapping.
Although the term "small portion" is not defined, we recommend that the regulations confirm that a five-percent rule is reasonable.