Opinion of the Court 25-13631

ROSENBAUM, Circuit Judge: High-frequency trading in securities markets is technologically sophisticated and almost incomprehensibly fast.

The dispute in this case centers on 350 microseconds, about one-third of one-thousandth of a second.1 That sounds fast—and it is—but it’s a long time for a high-frequency trader.

Today, securities trading operates based on electronic orders that travel between data centers extremely quickly, but not instantly. When a security’s price starts to shift on Exchange A, it takes a fraction of a second for traders to update their price for that security on Exchange B. During that time, traders with the fastest technical systems can race ahead to grab those securities at the outdated, “stale” price. They already know where the price is headed.

It’s a bit like making a sports wager using Biff Tannen’s (or Marty McFly’s) almanac in Back to the Future Part II.

Certain high-frequency traders make big money from this timing mismatch, called “latency arbitrage.” But investors lose more than $5 billion each year to latency arbitrageurs.

Intervenor Investors Exchange LLC (“IEX”) created a model to combat latency arbitrage. IEX adds 350 microseconds for incoming orders to reach its securities exchange, using a “speedbump” coil of fiber-optic cable. IEX software also detects when prices are out of sync across exchanges (when latency arbitrage otherwise occurs). During those moments, IEX speeds up the process of updating traders’ prices. Often, that means prices on IEX can sync to the market price before latency-arbitrage orders finish racing through IEX’s speedbump.

IEX launched its technology in the equities market. And the District of Columbia Circuit upheld a Securities and Exchange Commission (“SEC” or “Commission”) decision approving that technology. Last year, though, IEX proposed to expand into options trading with a new platform, IEX Options. Again, the Commission approved IEX’s proposal. 90 Fed. Reg. 45861 (Sept. 23, 2025).

Citadel Securities LLC (“Citadel”), a leading high-frequency trader and market maker, petitioned for review of the Commission’s approval order.

Citadel’s petition poses five issues for our review. First and second, Citadel challenges the Commission’s findings that latency arbitrage exists in options markets and that IEX’s model would target latency arbitrage accurately. Third, Citadel asserts that quotations on IEX Options don’t meet the criteria to qualify as “protected” quotations. Fourth and fifth, Citadel argues that it was arbitrary and capricious for the Commission to determine that IEX Options will not unfairly discriminate and that IEX Options will not impose an undue burden on competition.

After careful review and with the benefit of oral argument, we conclude that Citadel’s positions lack merit. So we deny Citadel’s petition.

Read the full court decision here

Source: U.S. Court of Appeals for the Eleventh Circuit