Core terms
Marketable limit order
A buy limit order priced at or above the national best offer, or a sell limit order priced at or below the national best bid, when the order is received. It can trade at once, but only up to its limit price.
Rule 600(b) of SEC Regulation NMS (17 CFR 242.600) defines the term against the national best bid and offer at the time the order is received (as of 2026-10-05). The limit price works as a ceiling for a buy and a floor for a sell: the order takes available offers (or bids) up to that price, and the part it cannot reach stays unfilled or is cancelled, depending on its time in force.
In an Illustrative example, with the ask at $3.12, a buy limit at $3.17 (ask + $0.05) fills like a market order through any offers up to $3.17 and stops there. The offset sets the maximum entry slippage. A tight offset produces more partial fills and misses, mostly on the moves that ran; a loose one fills more often and, in a thin book, can use up a large share of a 15–20 cent target.
What traders should verify
Size from the ceiling, not from the ask, so a fill at the limit still fits the planned risk, and decide before sending what happens to a partial fill. Log the arrival ask, the ceiling and the average fill to measure entry slippage.
Do not conflate
The definition is tied to the quote when the order arrives; if the quote moves past the limit first, the order rests or is cancelled instead of filling. The limit caps the price, not the outcome, and many simulators fill marketable limits at the arrival ask regardless of size.
Primary source
Primary sourceSEC Rule 600(b), 17 CFR 242.600