Is this the expected market behavior?

[Mike Mancini]

Hello,

I'm questioning the following matching behavior I observed in the mt_order_entry example liquibook application after placing the following three orders sequentially:

1) Place a #1 BUY 100 IBM MKT order.
2) Place a #2 BUY 100 IBM $2 order.
3) Place a #3 SELL 105 IBM MKT order

As expected, when the "sell 105 IBM@MKT" order (#3) is placed, it matches with the entire quantity of the "buy 100 IBM@$2" order (#2), and there are 5 leftover shares for the seller to sell.
Since a trade has occurred, and presumably a market price has been established ($2), I'm wondering why those leftover shares on the sell side did not match with 5 shares from the open "buy 100 IBM@MKT" order (#1)?  I'd expect those 5 extra shares to match with 5 shares of order #1 at a $2 market price.


Instead, this is the result of the depth book after order 3 matched with order 2:

Order book for IBM:
  Ask 5 @ Sell at Market
  Bid 100 @ Buy at Market


Is my expectation wrong?

Thanks,

Mike Mancini