Is Latency Arbitrage Considered Illegal Market Manipulation by US Regulators?

Generally, latency arbitrage is not considered illegal market manipulation. It is viewed as a competitive, high-speed trading strategy that exploits temporary price discrepancies across different venues, which is a feature of fragmented markets.

However, if the strategy involves deceptive practices like "spoofing" or "layering" to create the price discrepancy, it crosses the line into illegal manipulation under rules enforced by the SEC and CFTC.