Citadel Securities LLC v. U.S. Securities and Exchange Commission

── Citadel Securities LLC v. U.S. Securities and Exchange Commission ── Court: Court of Appeals for the Eleventh Circuit Date: May 29, 2026 Category: NEW USCA11 Case: 25-13631 Document: 71-1 Date Filed: 05/29/2026 Page: 1 of 49 FOR PUBLICATION In the United States Court of Appeals For the Eleventh Circuit ____________________ No. 25-13631 ____________________ CITADEL SECURITIES LLC, Petitioner, versus U.S. SECURITIES AND EXCHANGE COMMISSION, Respondent, INVESTORS EXCHANGE, LLC, Intervenor. ____________________ Petition for Review of a Decision of the Securities and Exchange Commission Agency No. SR-IEX-2025-02 ____________________ Before ROSENBAUM, LAGOA, and MARCUS, Circuit Judges. USCA11 Case: 25-13631 Document: 71-1 Date Filed: 05/29/2026 Page: 2 of 49 2 Opinion of the Court 25-13631 ROSENBAUM, Circuit Judge: High-frequency trading in securities markets is technologi- cally 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 or- ders 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 out- dated, “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 in- coming orders to reach its securities exchange, using a “speed- bump” coil of fiber-optic cable. IEX software also detects when 1 A microsecond is one millionth of a second. Each millisecond consists of 1,000 microseconds. USCA11 Case: 25-13631 Document: 71-1 Date Filed: 05/29/2026 Page: 3 of 49 25-13631 Opinion of the Court 3 prices are out of sync across exchanges (when latency arbitrage otherwise occurs). During those moments, IEX speeds up the pro- cess 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 op- tions trading with a new platform, IEX Options. Again, the Com- mission approved IEX’s proposal. 90 Fed. Reg. 45861 (Sept. 23, 2025). Citadel Securities LLC (“Citadel”), a leading high-frequency