Securities and Exchange Commission gives green light to IEX Options debut, despite pushback from Citadel Securities
The US Securities and Exchange Commission (SEC) has given the green light for IEX Group to launch their new options exchange, named "IEX Options", marking a significant move in the stock market today. The decision comes after a thorough review of IEX's proposal, which has received support from a variety of industry participants.
Brad Katsuyama, founder and CEO of IEX Group, expressed his gratitude for the SEC's approval. He reiterated IEX's commitment to innovating for performance and superior execution quality.
"IEX Options" will boast a 350-microsecond symmetric access delay, designed to level the playing field for all participants. This feature is expected to curb latency arbitrage and improve displayed liquidity, as stated by smaller market makers, academics, and trading firms like Virtu.
Virtu, in particular, has called the design of "IEX Options" "well-intentioned" and potentially beneficial for retail execution. However, not everyone in the stock market is on board with the plan.
Citadel Securities, a large market maker, has argued that the delay/ORP could enable quote "fading" and harm investors. They claim that IEX's quote-canceling scheme, which allows for the cancellation or repricing of market-maker quotes deemed stale, undermines the integrity of markets.
Citadel Securities goes further, stating that IEX's quote-canceling scheme steals money from millions of investors. A spokesperson for Citadel Securities criticized the scheme, saying it is not in the best interests of the market.
However, Daniel Schalepfer, representing mid-tier liquidity providers, has countered Citadel's arguments, stating that their opposition to IEX's option market proposal is not based on concerns about fading liquidity or inaccessible quotes, or the welfare of retail investors.
The Commodity Futures Trading Commission (CFTC) has also approved the planning of IEX for the introduction of "IEX Options." IEX Group looks forward to taking the next steps towards launching their options exchange, bringing a new level of competition to the options market.
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