An order whereby a trader can follow the best bid, when selling a security, and the best offer, when buying a security. This order is pegged to the national best bid, best offer (NBBO) on the opposite side of the market (with an offset priced less aggressively than national best offer (NBO) for buy orders and national best bid (NBB) for sell orders).
A market peg order is a priced or unpriced firm order or conditional pegged to the opposite side of the market, either at the inside quote or with an offset amount to increase or decrease the resulting price’s aggressiveness. More specifically, a buy order will peg to the NBO less one tick. A sell order will peg to the NBB plus one tick. If the spread of the NBBO is one tick, the market peg order will peg to the mid-point.
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