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The IEX Options Exchange has been approved by the SEC. The exchange will implement a “speed bump” entrance ramp to slow all incoming orders by 350 millionths of a second. This is similar to IEX’s stock exchange and aims to improve market efficiency and fairness.The Securities and Exchange Commission (SEC) has approved IEX Group Inc.’s application to operate a new options exchange, marking a significant milestone in the company’s expansion into the derivatives market. The new exchange will introduce a unique “speed bump” mechanism designed to slow down incoming orders by 350 millionths of a second, aiming to enhance market efficiency and fairness.The SEC’s approval allows IEX to implement a system that delays, cancels, and reprices options orders on behalf of market-makers. This mechanism is similar to the one used by IEX in its equities market, which the company has touted as a way to counteract latency arbitrage, a practice that can add operational costs to the market. According to IEX, the new options exchange will be the 19th such venue in the United States.Brad Katsuyama, IEX co-founder and CEO, expressed gratitude for the SEC’s approval, stating, “We appreciate the SEC’s review and approval of the IEX Options proposal. IEX remains dedicated to innovating for performance and superior execution quality and looks forward to taking the next steps towards launching our options exchange.”The approval comes amidst a surge in trading volumes in the US options market, driven in part by a boom in contracts tied to the S&P 500 that expire within 24 hours. Miami International Holdings Inc. and the Members Exchange (MEMX) have already established new options venues, further highlighting the growing competition in the market.While Citadel Securities raised concerns over IEX’s proposal, arguing that its quote-canceling plan would harm investors and benefit only its shareholders and select market-makers, other market-makers, individual traders, and buy-side institutions have expressed support for the initiative. They believe it will help combat mounting costs and improve options pricing.IEX, which started as a stock exchange in 2016, has built a reputation for advocating market integrity and fairness in pricing. The firm, co-founded by Katsuyama and Ronan Ryan while working at Royal Bank of Canada, has been a significant player in the equities market, representing about 3.3% of average daily US equities-trading volume so far this month.The approval of the IEX Options Exchange signals a continued trend of innovation and competition in the US trading landscape, as new venues seek to address market inefficiencies and provide alternative trading platforms.AInvest NewsletterDaily stocks & crypto headlines, free to your inboxGet Newsletter with EmailContinue with GoogleOr continue with othersAppleFacebookXBy continuing, I agree to the Market Data Terms of Service and Privacy Statement