Citadel Loses Challenge to SEC Approval of New Options Exchange

The SEC properly approved a new options trading platform that curbs high-frequency traders’ edge over other investors, a federal appeals court said Friday, rejecting a challenge by Citadel Securities LLC.

Citadel fell short in its argument that the IEX Options exchange addresses a problem that doesn’t exist, Judge Robin S. Rosenbaum said for the US Court of Appeals for the Eleventh Circuit. Substantial evidence supported the Securities and Exchange Commission’s determinations that a fraction-of-a-second trading advantage—called latency arbitrage—negatively affects the options market and that the IEX exchange’s software targets the problem accurately, she said.

Citadel’s other arguments, including that the platform run by IEX Group Inc. is unfairly discriminatory and anticompetitive, also lack merit, she said.

The SEC, which approved IEX Options with a 350-microsecond delay and review feature in September 2025, acknowledged at the time that the mechanism will directly benefit some IEX member market-makers over other types of market participants. Like another IEX discretionary limit rule for equities trading, the IEX options rule would mitigate latency-arbitrage trading, the SEC reasoned in approving the exchange.

Oral argument on Citadel’s petition for review of the agency’s action took place April 28.

“The dispute in this case centers on 350 microseconds, about one-third of one-thousandth of a second,” Rosenbaum said. “That sounds fast—and it is—but it’s a long time for a high-frequency trader” such as Citadel, she said. IEX uses a coil of fiber-optic cable to slow incoming orders to its securities exchange by that same fraction of a second, and the SEC approved its use of the technology in an options exchange, she said.

Judges Barbara Lagoa and Stanley Marcus also served on the panel.

Gibson, Dunn & Crutcher LLP represented Citadel. The SEC represented itself. Wachtell, Lipton, Rosen & Katz represented IEX, which intervened in the case.

The case is Citadel Sec. LLC v. SEC, 11th Cir., No. 25-13631, 5/29/26.