The Hyperliquid Policy Center and Douro Labs have urged the U.S. Securities and Exchange Commission to repeal one of the central rules governing American equity-market execution, arguing that its traditional definition of the “best” available price does not translate effectively to blockchain-based markets. The organizations submitted a joint comment on August 17 supporting the SEC’s proposal to rescind Rule 611 of Regulation National Market System, commonly known as the trade-through or Order Protection Rule.
Rule 611 generally prevents trading venues from executing transactions at prices inferior to protected quotations displayed elsewhere. Adopted as part of Regulation NMS in 2005, the framework helped establish the National Best Bid and Offer, or NBBO, as a critical reference point for U.S. stock execution. The SEC itself proposed eliminating Rule 611 on June 11, alongside Rule 610(e), which restricts locked and crossed quotations. The public-comment period for the proposal, docket S7-2026-20, closed August 17.
Why the NBBO Becomes Difficult Onchain
Hyperliquid Policy Center and Douro Labs argue that Rule 611 assumes a market architecture fundamentally different from decentralized finance. Traditional exchanges continuously publish bids and offers that can be aggregated through securities information processors to determine the NBBO. Automated market makers do not necessarily operate that way. Prices can instead emerge algorithmically from liquidity pools at the moment a transaction executes. Blockchain markets also operate continuously, including overnight, weekends and holidays when conventional U.S. securities markets and their consolidated feeds may not be functioning.
Settlement introduces another mismatch. Traditional market-data systems can update quotations in microseconds, while blockchain transactions ultimately settle according to block production and network finality. Douro Labs has separately argued that execution quality should therefore account for more than displayed price. Its proposed framework considers factors including execution certainty, privacy, atomicity, finality, slippage and total transaction costs. The company, a core contributor to Pyth Network, has also advocated allowing verifiable decentralized price feeds such as Pyth to serve as alternatives to centralized market-data infrastructure where appropriate.
SEC Is Already Considering Repeal
The industry’s request arrives unusually close to the SEC’s own position. Chairman Paul Atkins has opposed Rule 611 since its adoption more than two decades ago. When announcing the repeal proposal in June, Atkins argued that the rule contributed to fragmented liquidity and produced an increasingly complex and costly system for executing stock trades. The SEC’s proposal says technological improvements and stronger connections among trading venues have reduced the need for Rule 611 and that maintaining it could inhibit new technologies, products and services.
That makes the debate particularly consequential for tokenized equities. If securities increasingly trade on public blockchains, regulators must determine whether those markets should reproduce the infrastructure of conventional exchanges or satisfy investor-protection requirements through different technological mechanisms. Hyperliquid Policy Center and Douro Labs favor the latter approach. They support principles-based best-execution requirements rather than prescriptive routing rules, while maintaining that tokenized U.S. stocks should remain subject to applicable investor protections. Repealing Rule 611 would not itself authorize unrestricted blockchain trading of securities. Broker-dealers, exchanges and tokenized securities would remain subject to other federal securities requirements. But eliminating the trade-through rule could remove a major structural obstacle to markets that operate continuously and settle directly onchain. The SEC must now decide whether a rule designed to connect fragmented stock exchanges in 2005 still improves execution in a market increasingly experimenting with blockchains, automated liquidity and 24/7 trading.
