What Is NBBO (National Best Bid and Offer)?
NBBO is the highest bid and lowest ask available across all US securities exchanges at any moment, consolidated by the Securities Information Processor (SIP). Brokers are required by Reg NMS to execute customer orders at the NBBO or better.
The NBBO is what retail brokers display as 'the price' — but it's a consolidated view, not necessarily what's happening on any single exchange. Some exchanges may have better hidden prices in dark pools or with different fee structures.
High-frequency traders compete to be at the NBBO because they capture order flow there. The SIP feed itself has a small delay vs. direct exchange feeds, which is one of the sources of HFT edge. Retail traders are protected by the NBBO rule but don't benefit from the speed advantages.
Related terms
- Order Book — Real-time list of all open buy and sell orders for an asset, by price.
- Bid-Ask Spread — The gap between the highest price buyers will pay (bid) and the lowest price sellers will accept (ask).
- Market Maker — Firm that quotes both buy and sell prices, providing liquidity for a profit on the spread.
- Level 2 (L2) Data — Real-time order book showing all visible bids and asks beyond the best price.