Your second scenario is correct Magna. It will execute the order 100,100,100 against the three 100 share quotes and then all 700 remaining will go against the reserve of MM1 assuming (obvioulsy) his reserve is at least 700 shares obviously. Again, with the zero second delay functionality, this would all happen withing about 2 seconds (Naz says allow .7 second for each execution due to "system requirements" or something like that.
Therefore, if you want to buy 1000 shares and there are six MMs posting 100 share size (some using reserve), under the new rules. We'll always get 5 seconds or slower execution (7x.7) , instead the instant execution (.7) against the 1000 shares MM using reserve is required to post under current rules.
Good point Fohat. I don't see any benefit for traders whatsoever with the new reg. At least under the old reg the MM had to tip his hat a bit by displaying 1000 shares if he had reserves (and you could be reasonably certain that if he was showing 1000 he had reserves, otherwise he probably wouldn't show that size). Now he doesn't. Under the old reg, if you were buying/selling 1000 sh (or less) you could get them filled instantly from one MM, now with everybody displaying 100 sh you can't. In some scenarios the new reg won't make any difference, but many times it will, not to the benefit of traders.
But I suppose that is understandable since we need every advantage we can get. However I think this is incorrect. I believe that SOES will take an order entered and auto execute the order to the MM with SOES priority. However if the order is larger than the displayed volume of the priority MM, then any excess volume is autoexecuted against the next MM in rotation as we have pointed out on this thread. I believe that this happens instantaneously, that is the SOES system will simultaneously autoexecute the order against the quotes of as many MM's as necessary (only MM's at the inside obviously) to fill the order and if this is not possible, the remaining volume is queued. therefore in Fohat's example, the order would be filled in the .7 seconds not the 5 seconds. Again this is my understanding anyway. In theory a good point to raise and one that will be easily verified once we start trading under the revised rule. But I again remind everyone, trading in a SOES environment with zero second interval delay and executions against reserve volume versus a 17 second interval delay and no executions against reserve volume is a monumental change and advantage to us so I try to keep that in perspective.