Citadel Securities sues SEC over approval of new type of stock order

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(Reuters) – Citadel Securities, which provides trading services to asset managers, banks, brokers and hedge funds, has taken legal action against the Securities and Exchange Commission over its decision to approve a new mechanism brokerage firm with upstart foreign exchange trader IEX Group Inc.

“The SEC has not properly taken into account the costs and burdens imposed by this proposal which will undermine the reliability of our markets and harm tens of millions of retail investors,” a spokesperson said on Friday. from Citadel Securities in an email.

The lawsuit, which was filed Friday and first reported by the Wall Street Journal, escalates Citadel Securities’ dispute over IEX’s “D-Limit” order type. D-Limit is designed to give traders a way to buy or sell stocks on the exchange while protecting them against adverse price movements.

Citadel Securities earlier asked the SEC to reject IEX’s proposal, saying the D limit would harm the integrity of the US stock market. But in August, the SEC sided with IEX, allowing the plan to move forward.

Citadel Securities has asked the U.S. District of Columbia Circuit Court of Appeals to review the SEC’s decision to approve the D-Limit Order, according to a copy of the court record.

The SEC was not immediately available for comment on Friday night.

IEX chairman Ronan Ryan, in a statement quoted by the Wall Street Journal, said he was confident the SEC decision would stand. “Since its launch on October 1, D-Limit is already proving valuable to a wide range of market players,” said Ryan.

“From our perspective, this recent action should only encourage more investors, brokers and market makers to use D-Limit as the protections we have created are clearly working,” Ryan said.

Reporting by Kanishka Singh; Editing by Leslie Adler

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