Vendor Display Rule

The Vendor Display Rule aims to enhance market transparency by requiring broker-dealers to provide a comprehensive view of bid and ask prices to their customers. It applies only to NMS stocks, which are listed on the US national exchanges and exclude OTC stocks.

Further to the Vendor Display Rule, Rule 600(b)(14) specifies that a "consolidated display" must include prices, sizes, and market identifications of the national best bid and offer (NBBO) for a security. In practice, the NBBO is generally sourced from the CTA and UTP SIPs.

A common approach used by broker-dealers to meet this requirement is to only display the NBBO using a "snap quote" from the CTA and UTP SIPs on the page or user interface that allows the customer to place an order. This allows them to minimize their license fees for the SIPs, since CTA and UTP's fee schedules have a per quote pricing option that are usually more economical than their per user fees.

To provide a smooth real-time trading experience, broker-dealers will usually complement this with an indicative BBO and last sale from a proprietary feed or blend of proprietary feeds that have lower user fees—these give a semblance of real-time trade ticks and a very close estimate of the NBBO on interfaces that do not need to meet the requirements for the Vendor Display Rule.

Some feeds that are commonly used for indicative real-time market data include Nasdaq Basic, Cboe One, NYSE BQT, or Databento US Equities Mini.