Hyperliquid Supports SEC Repeal of Transaction Settlement Rule, Calls for Best Execution Guidelines for On-chain Markets

BlockBeats News, August 17th. The U.S. Securities and Exchange Commission (SEC) had previously proposed to eliminate the core Reg NMS Rule 611 (Trade Through Rule) and the Order Protection Rule, suggesting that order handling should be driven by market competition and broker best execution obligations. The Hyperliquid Policy Center (HPC) and Douro Labs (a core contributor to the Pyth Network) jointly submitted a comment letter supporting the proposal and urged the SEC to provide guiding principles for best execution in on-chain markets.

The comment letter pointed out that Rule 611 assumes all venues pre-display quotes and aggregate them into the National Best Bid and Offer (NBBO) through a central processing mechanism, which fundamentally does not align with on-chain execution methods. AMM-type venues do not have pre-displayed quotes, and prices are determined at the moment of trade based on the liquidity pool; furthermore, on-chain order books exist entirely outside the central quote system. Additionally, the SEC is requested to confirm that tokenized NMS stocks remain subject to the Reg NMS investor protection framework, and that protection should not be altered due to differences in settlement ledgers. The abolition of Rule 611 would allow market structure to evolve through competition rather than regulatory design. It is also suggested that in the absence of an NBBO or when it does not reflect on-chain conditions, an independent reference price based on a transparent, manipulation-resistant methodology should be recognized.