National Best Bid and Offer - NBBO

Definition of 'National Best Bid and Offer - NBBO'


The best (lowest) available ask price and the best (highest) available bid price to investors when they buy and sell securities. National Best Bid and Offer is the bid and ask price the average person will see. The Securities and Exchange Commission’s Regulation NMS requires that brokers must guarantee customers this price.

Investopedia explains 'National Best Bid and Offer - NBBO'


The NBBO is updated throughout the day to show the highest and lowest offers for a security among all exchanges and market makers. The lowest ask price and the highest bid price displayed in the NBBO do not have to come from the same exchange. The best bid and ask prices from a single exchange or market maker are simply called “best bid and offer.” Traders who want to execute orders larger than those available through the NBBO will want to know the other potential bid and ask prices at which they could execute their orders. They can find these in an exchange or market maker’s “depth of book” data. Day traders usually use level 2 market-maker screens to see all the bids and offers for a particular stock.

The Consolidated Quotation System gives the NBBO for securities listed on the New York Stock Exchange, while the Unlisted Trading Privileges Quote Data Feed gives the NBBO for securities listed on the Nasdaq. A shortcoming of the NBBO system is that the data may not be sufficiently up to date, so investors may not get the prices they were anticipating when their trades are actually executed. This problem is mainly of concern to high-frequency traders, whose trading strategies may fail if their orders aren’t executed at a precise desired price. Another NBBO shortcoming is that Regulation NMS is difficult to enforce, because the fast pace of trading and the lack of recorded NBBO prices make it difficult to prove whether an investor received the NBBO price on a trade.



comments powered by Disqus
Hot Definitions
  1. Oil Reserves

    An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.
  2. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
  3. Aggregate Risk

    The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.
  4. Organic Growth

    The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.
  5. Family Limited Partnership - FLP

    A type of partnership designed to centralize family business or investment accounts. FLPs pool together a family's assets into one single family-owned business partnership that family members own shares of. FLPs are frequently used as an estate tax minimization strategy, as shares in the FLP can be transferred between generations, at lower taxation rates than would be applied to the partnership's holdings.
  6. Yield Burning

    The illegal practice of underwriters marking up the prices on bonds for the purpose of reducing the yield on the bond. This practice, referred to as "burning the yield," is done after the bond is placed in escrow for an investor who is awaiting repayment.
Trading Center