Citadel Securities Fights to Kill IEX Options at the 11th Circuit -- Better Markets Backs Retai

A court fight that could reshape how your options orders get filled is heating up in the 11th Circuit.

Better Markets filed an amicus brief on February 6 supporting the SEC's unanimous 2025 approval of IEX Options -- a new exchange designed to neutralize high-frequency trading latency arbitrage in options markets.

Citadel Securities, one of the dominant options market makers, is suing to overturn the approval.

What's Actually at Stake

Here's how the latency arbitrage problem works in plain terms:

1. Options prices lag behind changes in the underlying stock -- sometimes by fractions of a second
2. HFT firms with faster connections spot these stale prices before anyone else
3. They snap up the outdated quotes, then sell at the updated price for virtually guaranteed profit
4. This "peek and cheat" strategy costs other market participants -- including retail traders and pension funds -- billions annually

IEX Options addresses this with two mechanisms:

• Options Risk Parameter (ORP) -- Automatically updates or cancels stale options orders when the underlying security price moves
• 350-microsecond speed bump -- A brief delay on all incoming orders, giving the ORP time to adjust prices before faster firms can exploit them

The Track Record

This isn't the first time Citadel has tried to block IEX's protective mechanisms. In 2022, IEX deployed a similar technology called D-Limit for equity securities. Citadel sued to overturn that too -- and lost. The D.C. Circuit upheld the SEC's approval.

Now the same structural question plays out in options markets, where the economics of latency arbitrage are arguably even larger.

Fi's Trading Perspective

If you trade listed options, this case directly affects your execution quality:

• If IEX wins: Expect more exchanges to adopt similar speed bumps and automated price protection for options. Better fills for slower participants.
• If Citadel wins: The precedent chills future exchange innovation aimed at protecting retail and institutional traders from latency arbitrage. The status quo -- where HFTs extract value from stale quotes -- persists.

The core legal question: Does the SEC have authority to approve an exchange structure that deliberately neutralizes speed advantages? The D.C. Circuit already said yes for equities. Now the 11th Circuit weighs in for options.

Either way, this case defines the regulatory appetite for structural market fairness in U.S. derivatives for years to come.

Source: Better Markets Legal Update, February 2026 | Case: Citadel Securities LLC v. SEC, No. 25-13631 (11th Cir.)