Looking around I haven't found an answer to this simple question.
My understanding:
When the bid price exceeds the ask price (can you call this negative spread?) then orders start to execute. According to many exchanges, the order of execution would start with highest priced orders, being filled at the bid price and not the order's sell price.
Since a particular stock is pretty liquid and we only have delayed quotes, I can't simply put in a sell order equal to the current bid price if I want to guarantee an execution. Instead I would need to put a sell order in for an amount I think will cover the short-term volatility of the stock (some price lower than the current bid price).
When I put in my order it guarantees that orders will start executing (if they weren't already) according to exchange rules.
My question:
Now, are orders for this particular stock frozen (neither new orders added or existing orders canceled) until all orders execute (spread becomes non-negative)?
It seems like this would be the only fair way to operate. However, I have a suspicion that there are players in the market with fast computers that can simply spot a negative bid-ask spread and put in new sell orders at higher prices to get ahead in the queue, meaning that my limit order will inevitably always sell at my limit price rather than at the higher price it would have been filled at if orders were frozen during the execution process. Is that true?