The lowest price a prospective seller is prepared to accept, at a particular time, for trading a unit of a given security.
At-the-Quote
An ask or bid executed at the National Best Bid and Offer (NBBO), which occurs at the ask on a purchase or at the bid on a sale.
Auto-Execution
Thresholds established by liquidity providers allowing for the automated execution of orders regardless of the actual displayed size on the National Best Bid and Offer (NBBO).
Bid
The highest price a prospective buyer is prepared to pay, at a particular time, for trading a unit of a given security.
Directed Order
An order in which the client chooses the execution destination.
Electronic Communications Network (ECN)
ECNs are order-matching systems that provide outward-bound ability to execute client orders.
Exchange
A place or location where securities trades are conducted.
Internalization
The practice of a broker sending a client's order to another division or affiliate of the broker's firm to be filled out of the firm's inventory. This allows the broker's firm to make money on the "spread" or difference between the purchase price and sale price.
Liquidity Enhancement
An excess of shares offered over and above the displayed National Best Bid and Offer (NBBO) size. Enhanced liquidity can be considered a type of price improvement, as the retail client order has been executed with more shares than the displayed size.
Liquidity Provider
Also referred to as a Market Maker or Specialist. One who maintains firm bid and offer prices in a given security by standing ready to buy or sell at publicly quoted prices.
Market Maker
An individual or entity (such as a securities firm) that acts as a principal and stands ready to buy and sell for its own account. More generally, an individual or entity which buys and sells securities and holds an inventory.
Market Order
An order to buy or sell a security at the best available price.
Marketable Limit Order
Any buy order with a limit price equal to or greater than the National Best Offer at the time of order receipt, or any sell order with a limit price equal to or less than the National Best Bid at the time of order receipt.
National Best Bid and Offer (NBBO)
The best (highest) bid and best (lowest) offer displayed by market centers trading a specific security.
Non-Directed Order
An order in which the execution destination is chosen by the order sending firm and not the client.
Outside-the-Quote
For buy orders: an execution at a price higher than the consolidated best offer at the time of order receipt. For sell orders: an execution at a price lower than the consolidated best bid at the time of order receipt.
Price Improvement
Generally measured as an execution at a price superior to the National Best Bid and Offer (NBBO) at the time the order reaches the market. The amount of improvement can vary from fractions of a penny per share to whole pennies over the NBBO.
Size
Size of the market typically refers to the shares available to buy or sell at the current quote.
Specialist
A member of certain SEC-regulated exchanges who must make a market in assigned securities.
Speed of Execution
The turnkey time to receive an execution on market or marketable limit orders.
