National best bid and offer
What is national best bid and offer?
Under a regulation by the US Securities and Exchange Commission, brokers have to execute customer trades at the best available ask price when buying securities, and at the best available bid price when selling them. This is known as National Best Bid and Offer (NBBO).
Where have you heard about national best bid and offer?
If you invest on a US stock exchange you'll probably be familiar with the term, and with the Securities and Exchange Commission's Regulation NMS that underpins it.
What you need to know about national best bid and offer.
The national best bid and offer, usually referred to by its acronym NBBO, is updated throughout the day to show the highest and lowest offers for a security among all exchanges and market makers.
The Consolidated Quotation System gives the NBBO for securities listed on the New York Stock Exchange, and the Unlisted Trading Privileges Quote Data Feed gives the NBBO for securities listed on Nasdaq.
One issue with the NBBO system is that data might not be sufficiently up-to-date. It's mainly a problem for high-frequency traders, whose strategies risk failing if they don't get the exact price they want.