NBBO
Also known as: National Best Bid and Offer
The NBBO, short for National Best Bid and Offer, is the highest bid price and lowest ask price currently available for a across every exchange and trading venue where it trades. Since a can trade on many competing venues at once, each with its own posted quotes, the NBBO consolidates all of them into a single best price on each side, the best price a buyer can currently sell into and the best price a seller can currently buy at.
The NBBO predates , but those 2005 rules added protections around it, most notably the order protection rule, which requires trading venues to respect the best displayed prices across the market rather than letting a fill a client at a worse price just because it was convenient or on a venue the preferred. are required to give an execution at least as good as the NBBO at the moment the order is processed, which is a core part of the .
For an , the NBBO is effectively the reference price shown on most trading platforms and financial websites as the current bid and ask, even though it is really a composite of the best prices from across all venues, not necessarily quotes from any single exchange. Because the NBBO updates continuously as quotes across every venue change, it can shift from moment to moment even without any trade occurring, simply reflecting new orders being placed or pulled from the various that feed into it.