What Is the ‘National Best Bid and Offer’ (NBBO) and Its Relevance to Dark Pools?

The National Best Bid and Offer (NBBO) is the highest quoted bid price and the lowest quoted ask price available across all public exchanges in the US. It represents the best available price for investors.

Dark pools often use the NBBO as a reference point, aiming to execute trades at the midpoint of the NBBO or better. This mechanism allows dark pools to offer 'price improvement' over public markets while remaining anonymous.