Hyperliquid Policy Center and trade[XYZ] Urge SEC to Consider Pre-IPO Perpetual Markets

Hyperliquid Policy Center and trade[XYZ] have asked the U.S. Securities and Exchange Commission to consider pre-IPO perpetual markets as a new tool for public price discovery. The joint submission argues that trading perpetual contracts on companies before their initial public offering could give investors a clearer, market-driven sense of value ahead of a listing.

The joint request

In their appeal, the two groups laid out a case for allowing these contracts to trade openly. Perpetual contracts are derivatives with no expiration date, so traders can hold positions for as long as they want. That's different from standard futures, which settle on a set date. The idea is to create a liquid market that produces real price signals before a company's shares ever hit a public exchange.

The submission doesn't name specific companies or platforms that would offer such products. It focuses on the regulatory framework, asking the SEC to treat pre-IPO perpetuals as a legitimate price discovery mechanism.

Why price discovery matters

When a company goes public, the opening price is typically set through a book-building process led by underwriters. That process can be opaque, and the final number often reflects negotiations among a small group of institutional investors. Pre-IPO perpetual markets would let a broader set of traders bet on where a stock will land, potentially surfacing a consensus price earlier.

That's the core argument put forward by Hyperliquid Policy Center and trade[XYZ]. They see it as a way to democratize access to information that is usually locked inside investment banks and hedge funds. If successful, the approach could also help companies gauge investor appetite before committing to an IPO.

Perpetual contracts in practice

Perpetual contracts are already common in cryptocurrency markets, where they allow traders to speculate on digital assets with leverage and without worrying about expiry dates. Extending that structure to pre-IPO equities would be new, but the mechanics are not untested. The challenge for the SEC is whether such contracts fall under existing securities rules or require new ones.

The SEC has broad authority over securities markets, but it has not signaled any immediate action. The request is now sitting with the regulator, which could decide to open a comment period, hold a hearing, or simply let the matter drop. No timeline has been given.

What's at stake

If the SEC approves the concept, it could change how IPO pricing works. Companies would face a market that has already been pricing their stock for months, which might narrow the gap between the IPO price and the first day's trading. That could reduce the pop that often follows a listing, and also reduce the windfall for those who get allocations at the offer price.

But there are risks. Pre-IPO companies are not subject to the same disclosure requirements as public firms, so traders would be making bets on less information. The SEC will have to weigh that against the potential benefits of transparency.

For now, the ball is in the SEC's court. The two groups have made their case; the regulator's response will determine whether pre-IPO perpetual markets become a fixture of the U.S. financial system.