Quick definition Time priority means orders are executed in the order they were submitted. The first order to arrive at a price level is filled first. This is also called FIFO (First-In-First-Out). What it is When multiple orders rest at the same price level, time priority awards execution to the oldest order first. If you submit an order at 100.00 and someone else submits at 100.00 five seconds later, your order fills first when a market order arrives. Time priority creates incentives for early participation. Traders who submit orders early get better queue position. Why it matters Time priority is the standard queue discipline on most exchanges (NYSE, NASDAQ). It rewards early participation and is seen as fair. Time priority also affects market structure. If queue position is valuable, traders will submit orders earlier, and orders will rest longer on the book. Time priority versus pro-rata Pro-rata allocation gives execution proportional to order size. Time priority gives execution proportional to order arrival time. Time priority is more common. An example: at 100.00, Order A (100,000 shares, 10 seconds old) and Order B (50,000 shares, 5 seconds old). A market order for 75,000 shares arrives. With time priority: Order A fills 75,000, Order B fills 0. With pro-rata: Order A fills 50,000, Order B fills 25,000. Practical example You submit a buy order for 100,000 shares at 100.00. Someone else submits a buy order for 50,000 shares at 100.00, one second later. Your order is ahead in the queue. A market sell order for 75,000 shares arrives. Your order fills 75,000, and you still have 25,000 in the queue ahead of the other buyer. Queue position value In liquid markets, queue position has significant value. Traders with stale orders (long queue position) sometimes cancel and resubmit to get better queue position. See also - Price Priority - Pro-Rata Allocation - Queue Discipline - Matching Algorithm
