Hyperliquid Policy Center and Douro Labs have formally asked the U.S. Securities and Exchange Commission to repeal Rule 611, the trade-through rule, for onchain markets. The joint request, made directly to the SEC, targets a regulation that has governed how orders are routed across trading venues for nearly two decades.
What the trade-through rule does
Rule 611, part of the SEC's Regulation NMS, requires brokers to execute orders at the best available price across all public exchanges. It was designed to ensure investors get the most favorable quote, preventing trades from happening at worse prices when a better one is available elsewhere. The rule has been a cornerstone of U.S. equity market structure since 2005.
But the rule is built around a centralized model—exchanges, brokers, and a single national market system. Onchain markets operate differently. They run on blockchains, trade 24/7, and have no central order book that fits neatly into the existing regulatory framework. The two groups argue that applying Rule 611 to these venues is a mismatch, though their specific reasoning hasn't been made public beyond the request itself.
The case for an onchain carve-out
Onchain markets are decentralized platforms where buyers and sellers interact directly through smart contracts. They don't have a designated broker or exchange in the traditional sense. Forcing them to comply with Rule 611 could create friction, potentially slowing execution or requiring infrastructure that doesn't exist onchain.
The request from Hyperliquid Policy Center and Douro Labs isn't a blanket challenge to the rule. It's a targeted ask: repeal it specifically for onchain markets, not for the traditional equities market. That distinction matters because it suggests the groups aren't trying to upend the broader market structure, but rather to carve out space for a different kind of trading environment.
What the SEC might do
The SEC has not yet responded to the request. There's no indication of when the agency might take action, or if it will. The commission has been actively reviewing its approach to digital assets, and this request adds to the pile of rulemaking petitions and comment letters it's juggling.
The outcome is far from certain. The SEC could reject the request outright, open a formal comment period, or simply ignore it. For Hyperliquid Policy Center and Douro Labs, the next step is likely waiting—and possibly building a more detailed case if the SEC asks for one.
For now, the question is whether the SEC sees onchain markets as distinct enough to warrant their own set of rules. That's a decision that will take time, and it's not clear when it will come.
