What causes stock orders to execute outside the NBBO?

Question

I was reading Stocks Order Routing and Execution Quality on Robinhood's help pages, which says:

For example, in the third quarter of 2020, 97.53% of our customers' market orders for S&P 500 stock were executed at the NBBO or better [...]

This implies that 2.47% of market orders for S&P 500 stock on Robinhood were executed outside the National Best Bid and Offer (NBBO).
The situation is similar at another stock broker: Charles Schwab (Q3 2020 screenshot).
What causes some orders to execute outside the NBBO?

TomTom · Answer

The fact that you can send an order to an exchange that is not necessarily having the best offer. The NBBO is an artificial created in a data center. Orders do not execute there, they execute on exchanges. It takes time to send the changes in the order book from the exchange to the NBBO processing facility. So, even a good order routing algorithm may simply send the order to an exchange that it THINKS is best, but that is not best at the moment because of data still in transit and not distributed in the NBBO.

Answered by TomTom on March 2, 2021

What causes stock orders to execute outside the NBBO?

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