Virtu and Citadel Securities Take Opposing Sides in Regulatory Debate over IEX’s Options Market Plan

A regulatory clash over market infrastructure has emerged between two of the largest U.S. trading firms, Virtu Financial and Citadel Securities, as they offer conflicting views on the launch of a proposed options exchange by IEX Group.

The dispute centers on IEX’s plan to introduce a 350-microsecond latency mechanism—commonly known as a “speed bump”—on its proposed equity options exchange. The system would allow IEX to reprice and cancel a small portion of orders to protect participants from executing against outdated quotes. IEX says this feature is designed to counter latency arbitrage, where high-speed traders capitalize on delays in quote updates to gain price advantages.

Citadel Securities, one of the dominant market makers in U.S. equities and options, has objected to the proposal. In a formal letter to the Securities and Exchange Commission (SEC), the firm labeled IEX’s structure as unlawful and argued that such mechanisms could distort the market, restrict access to real-time liquidity, and benefit specific stakeholders at the expense of broader retail participants.

Virtu, another major electronic trading firm, has offered public support for IEX, submitting a letter to the SEC arguing that the proposed structure could improve market transparency and serve as a check on unfair latency-driven trading practices. Virtu emphasized that introducing new market venues can foster competition and offer alternate execution models for institutional and retail traders.

The debate has gained wider industry attention. Major exchange operators like the New York Stock Exchange and Nasdaq, along with retail broker Charles Schwab, have also expressed reservations about IEX’s approach. Meanwhile, advocacy group We The Investors has submitted a letter backing IEX’s framework and criticizing continued resistance to latency-focused protections.

This is not the first time IEX and Citadel Securities have faced off in front of regulators. Nearly a decade ago, Citadel objected to IEX’s registration as a national securities exchange. That application was eventually approved, although IEX remains a minor player in U.S. equities, with a market share of around 2.6%.

If approved, the IEX options exchange would become the latest venue to enter the increasingly crowded U.S. listed options market. The SEC has yet to issue a decision on the application.