Citadel Securities has asked a US court to review the SEC’s 18 September approval of IEX’s new options exchange, escalating a long-running dispute over the anti-latency-arbitrage protections offered by IEX Options.
Citadel Securities has asked a US court to review the SEC’s 18 September approval of IEX’s new options exchange, escalating a long-running dispute over the anti-latency-arbitrage protections offered by IEX Options.
Citadel Securities has petitioned the Eleventh Circuit Appeals Court for review of the SEC’s 18 September 2025 order approving “IEX Options,”. It seeks to set aside or revoke the SEC’s approval. The case follows Citadel Securities’ earlier, unsuccessful, challenge to IEX’s D-Limit in equities, which a D.C. Circuit panel upheld in 2022.
The SEC approved IEX’s plan to operate an options venue with a symmetric 350 microsecond access delay and an options risk parameter (ORP) that can cancel or reprice a market-maker’s displayed quote during that delay if the underlying stock price changes and that specifically intended to limit the ability of latency arbitragers to pick option market makers’ quotes. The SEC concluded that the delay is de minimis and that the protections are narrowly tailored to address latency-arbitrage dynamics in options, citing parallels to IEX’s equities “D-Limit” framework.
Read more: Breaking: SEC approves IEX Options launch despite “Citadel’ securities campaign”
In its rulemaking submissions and in the petitioning materials, Citadel Securities argues that IEX’s design introduces a “quote-cancelling mechanism that would convert “protected” prices into non-firm ‘maybe’ quotations and therefore expand Reg NMS order-protection in an unlawful way. Citadel Securities says it disadvantages investors forced to route to IEX’s quote that may be canceled before execution. Citadel Securities also asserts procedural defects: it reasserts that IEX’s mid-process amendments were material and should have triggered a new review period under Exchange Act §19(b).
A spokesperson for Citadel Securities told Global Trading: “IEX’s quote-cancelling scheme undermines the integrity of our markets, shifting potentially millions from investors to IEX and its insiders. The SEC failed to consider its adverse impact on the fairness, efficiency, and reliability of our options market – concerns that were raised by our nation’s leading exchanges, broker-dealers, and market makers.”
Citadel Securities has previously challenged the SEC’s approval of IEX’s “D-Limit” in equities. IEX’s explains that the D-Limit order type is a discretionary limit order type that automatically reprices to protect against adverse selection or trading against a price that is about to move unfavourably. In July 2022, the DC circuit upheld the SEC, concluding the agency reasonably treated D-Limit’s effects as de minimis and not unduly discriminatory. At the time judge Walker had questioned if Citadel Securities was trying to regulate their way into a market victory.
When approving IEX options, the SEC’s order found that investors “do not typically trade in microseconds”; the 350 microseconds delay is within existing geographic/technological latencies, and that the ORP will only infrequently cancel or reprice quotes as opposed to Citadel Securities’ assertion. the SEC therefore determined the proposal does not impose an undue burden on competition and is consistent with the Act.
A spokesperson for IEX told Global Trading: “We are aware that Citadel has filed a lawsuit against the SEC challenging the approval of options trading on IEX’s exchange. We have full confidence in the SEC’s rigorous and independent review process and in the integrity of its decision”.
The spokesperson added, “IEX has spent years building markets that protect investors and liquidity providers from latency arbitrage. Citadel has no new arguments, they are repeating the arguments that failed in the D-Limit case, and their arguments carry even less weight given the existing precedents in options and the need for solutions to protect liquidity providers. We believe that we have the right to innovate and compete in US markets and look forward to, for a second time, successfully defending our innovations in court.”
Further filings will set the briefing schedule and any requests for interim relief.
The SEC was not available for comment due to the current US government shutdown.
