On This Page
Key Takeaways
- Price-time priority ranks resting orders by price first and by arrival time second, so the earliest order at the best price trades first.
- Queue position is created at the moment an order is accepted by a venue, and a cancel-and-replace gives the new order a new acceptance time at the back of that queue.
- Price-time is one allocation model among several. Cboe BZX Options runs a price-time model while Cboe C2 Options runs a pro-rata model, where size rather than arrival order drives the split.
- Priority overlays such as retail priority and customer priority can rank certain orders ahead of earlier arrivals at the same price.
- Priority applies inside a single venue. The national best bid and offer is a composite of many venues, each maintaining its own queue.
What is price-time priority?
Price-time priority is the order book rule that ranks resting orders by price and then by venue acceptance time. Higher bids lead the buy side, lower offers lead the sell side, and equally ranked orders at one price fill in arrival order. This first in, first out sequence is also called FIFO matching.
That makes queue position part of the execution decision. Joining an existing price puts the new order behind earlier same-price interest under pure FIFO rules. Improving the price establishes a better price level.
Formula
Pure displayed FIFO priority: best price first, then earliest venue acceptance. Displayed quantity ahead at entry = same-price quantity already ranked ahead.- Highest bids and lowest offers receive price priority.
- Venue acceptance establishes queue time.
- Executions and cancellations reduce the quantity ahead.
- Apply the venue’s allocation rules, including display and customer-priority treatment.
Price-time priority example: a 500-share bid in the queue
XYZ has three displayed bids at $20.10 on a pure FIFO book, accepted in this order: 600 shares, 400 shares and 800 shares. A trader then joins with 500 shares. No orders change or cancel during the two incoming sells. The next bid is $20.09 for 1,400 shares.
- Shares ranked ahead of the new order at $20.10: 600 + 400 + 800 = 1,800
- Displayed size at $20.10 after the join: 1,800 + 500 = 2,300
- An incoming market sell of 1,500 shares fills 600, then 400, then 500 of the third order, leaving 300 shares ahead
- Fill for the joining trader on that sell: 0 of 500 shares
- A second market sell of 1,000 shares clears the remaining 300, fills the 500-share order in full, and leaves 200 shares to trade at the next price level
The first 1,500-share sell leaves 300 shares ahead of the trader. The next 1,000-share sell fills those 300, fills the trader’s 500 at $20.10, and trades 200 at $20.09. The trader buys 500 shares for $10,050.
Price-time vs pro-rata and other allocation models
Cboe BZX Options uses price-time, C2 uses pro-rata, and EDGX Options combines pro-rata allocation with customer priority and a designated market-maker structure. Pro-rata allocation distributes quantity using order size and the applicable rounding and priority rules.
Cboe EDGX equities applies price, retail priority and then time to eligible displayed retail orders. Auctions and complex-order mechanisms apply their own allocation procedures.
Each venue maintains its own queue. The NBBO combines the best national prices; the resting order’s exchange determines its queue position.
Tracking queue position and the order book
Executions and cancellations change the quantity ahead. A cancellation and replacement establishes a new acceptance time, while the venue’s amendment rules govern other changes.
Aggregate market depth combines size by price. Order-level products such as Nasdaq TotalView-ITCH publish individual order references and book events. Read the order-level feed for the orders ahead of you and the broker’s acknowledgment for your own acceptance time; together they place you in the queue.
A marketable limit order executes against available eligible interest up to its limit. Its remaining quantity follows the order’s instructions, including resting or cancellation. For an options entry, the options profit calculator shows how the intended fill price changes breakeven and payoff.
Limitations of price-time priority
- Priority applies inside one venue. The NBBO combines many venues, each with its own queue, so find the order’s place in the queue of the exchange where it rests.
- Check the venue’s model before counting on a place in line: pro-rata allocation splits fills by size, and customer or retail priority ranks eligible orders ahead of earlier arrivals at the same price.
- Aggregate depth gives the size at each price level; the quantity ahead of your order comes from order-level data and the broker's acknowledgment.
- Improve the price when the queue is too slow. A place in the queue fills only when the market trades through it: when price moves away before the queue reaches the order, it stays unfilled, and a cancel-and-replace sends it to the back with a new acceptance time.
- Track cancellations ahead of your order; they move it up the queue. Display rules, auctions and complex-order mechanisms apply their own procedures on top of FIFO.
Bottom line
Price-time priority decides who trades first at a price: the best price leads, then the earliest accepted order. Use it to weigh joining a price against improving it, and check each venue’s allocation model before assuming a place in line.
Clear answers
Frequently Asked Questions
Sources and Further Reading
- Cboe: U.S. Options Exchange Overview and Allocation Models
- Cboe: U.S. Equities Retail Priority
- Fidelity: Order Types and Conditions
- Fidelity: ECN Order Handling Notes
How entries are sourced, calculated and updated: editorial methodology.