We analyze the impact of a minimum price variation (tick) and time priority on the dynamics of quotes and the trading … dynamic. We compare the trading outcomes with and without time priority. Time priority is shown to guarantee that …

This paper analyses the impact of a minimum price variation (tick) and time priority on the quote dynamics and on … dynamic. The paper compares the trading outcomes with and without time priority. It shows that, for reasonable … parameterizations, time priority reduces trading costs because it prevents equilibria in which uncompetitive spreads can be sustained …