A stock is $10 bid and $11 offered. Alice places a marketable buy limit order with a limit price of $12 per share. At exactly the same time, Bob places a marketable buy limit order with a limit price of $13 per share. Assume that the market's bid and offer prices do not change. Does Bob's order have priority over Alice's order by virtue of Bob's higher limit order price?
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Also "Assume that the market's bid and offer prices do not change" I'm guessing what you mean there is "in the example assume there are plenty of asks at 11.00 so that alice and bob can both potentially buy at 11".– FattieJun 10, 2021 at 13:20
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@Fattie No, I really mean "marketable limit order" (as opposed to a non-marketable limit order). That is a standard term.– FluxJun 10, 2021 at 13:32
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@Fattie You can find the definition of "marketable limit order" in the NYSE and NASDAQ rulebooks, and in Regulation NMS (17 CFR § 242.600).– FluxJun 10, 2021 at 13:32
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Flux, my bad, I had no idea that strange term was mentioned in a rulebook somewhere. I'd say it's not a "standard" (ie, used commonly) term. You could perhaps call it a technical term, the rulebook term, or an obscure term. But that's just my opinion. Ask people who trade frequently.– FattieJun 10, 2021 at 14:11
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1 Answer
"At exactly the same time"
Your question is meaningless.
In the database, there's just a sequence for orders. (1, 2, 3 etc.)† They cannot be at the "same time", time is not used and the concept is meaningless. The sequence numbers are unique and ascending.
So as a general concept there's (a) price ordering {no connection at all to time} and (b) sequence ordering {no connection at all to time}. (And indeed (a) comes first then (b) second in the spirit of your question.)
Setting that issue aside, the answer to the spirit of your question is "No": the limit figure is not used in any way, whatsoever, to decide between two possibles, only the sequence mentioned in the 2e para.
† {Time, per se, is irrelevant; it would be commonplace and ubiquitous that many orders have the same time-stamp, whatever resolution is used on whatever platform; it means nothing: the sequential ordering is used to differentiate.}
