Citadel Securities LLC on Oct. 16 filed a lawsuit against the U.S. Securities and Exchange Commission for approving a new order type introduced by IEX Group Inc., Bloomberg News reported, citing Citadel Securities.

Late in August, the SEC approved IEX's proposed Discretionary Limit, or D-Limit, order type, which will provide traders and investors with the ability to submit a limit order that IEX says will adjust its pricing if the stock price is estimated to adversely change.

Citadel Securities, the trading and market-making shop, wrote to the SEC in mid-August, claiming that the IEX D-Limit proposal will "discriminate against all types of liquidity takers" because predictive technology known as the IEX Signal can be triggered by ordinary trading activity and could therefore force brokers to reevaluate their routing strategies.

After filing the lawsuit with the U.S. Court of Appeals in Washington, Citadel said the SEC "failed to properly consider the costs and burdens imposed by this proposal," which could potentially "harm tens of millions of retail investors."

IEX co-founder and President Ronan Ryan said he is confident that the SEC's approval will be upheld, Bloomberg News reported. The regulator declined to comment.

Hudson River Trading LLC and Nasdaq Inc. are reportedly among those that oppose the IEX order type.