Can someone detail the steps of publishing NBBO bids and offers on the National Market System (United States)?
For example, I was reading about the new (2010) alternative uptick rule implemented by the SEC that states:
The alternative uptick rule (Rule 201) approved today imposes restrictions on short selling only when a stock has triggered a circuit breaker by experiencing a price decline of at least 10 percent in one day. At that point, short selling would be permitted if the price of the security is above the current national best bid.
You can connect directly to exchanges registered with the SEC in the United States for prices. It is documented due to latency effects that you can get better prices than the NBBO feed.
How is the NBBO/NMS system actually implemented (an overview or in a technological sense)? The exchanges are allowed to operate on their own, and submit price feeds to a consolidated centralized source (who is this, where are they geographically located, how does this information get there, how long does it take to process and redistribute, how do we know it's verified?). The SEC is the authority, but what is the infrastructure/microstructure that is implemented (and is it implemented without controversy?).
Thanks in advance for any references.