national market system (NMS) business definition

A centralized system for reporting transactions and quotations from all qualified market makers. A national market system has been encouraged by the SEC as a trading system that would increase competition among exchanges and market makers, thus providing investors with more liquidity and better prices. Essentially, a national market system is envisioned as a single large market in which market makers are linked by telecommunications with information being freely available. Customer orders would be automatically filled at the best available prices.