What is a National Best Bid and Offer (NBBO)?
The National Best Bid and Offer (NBBO) is the highest bid and lowest Nasdaq.price quoted on
How Does a National Best Bid and Offer (NBBO) Work?
For example, let's say the following people have buy orders (bids) for Company XYZ (these are the prices people are willing to pay for the):
50 for $20.01 per
150 for $19.79 per
200 for $21 per
The following people have sell orders (offers) for Company XYZ (these are the prices people are willing to accept for their):
50 for $21.50 per
150 for $20.01 per
200 for $21.25 per
Thefor Company XYZ is $21.00/$20.01. That is, the highest someone is willing to pay is $21 and the lowest someone is willing to accept for their is $20.01. The changes all the time, however, as orders enter and leave the .
Why Does a National Best Bid and Offer (NBBO) Matter?
The SEC requires brokers to their customers the best available ask price and the best available bid price when they trade securities, which is where the comes into play. The is also important to makers, because they indicate what they should charge or expect for the they make markets for. that the SEC typically requires makers to display limit orders for 100 or more, meaning that some of the orders in our example might not into the calculations because they are under 100 .
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
When a company dumps an executive, it's definitely a sign that it's time to step back, look at the big picture, and try to get a feeling for whether the news is a positive or negative for the...Read More →
Forget what you've heard, debt-laden companies offer great turnaround potential if you know what to look for. For...Read More →