Hyperliquid supports SEC's repeal of transactional penetration rules and calls for the establishment of best execution guidelines for the on-chain market

Comparatively, in June, the US Securities and Exchange Commission proposed abolishing the Reg NMS core rule Rule 611 (trade penetration rule) and the ban on locking or cross-quotation, believing that order processing should be dominated by market competition and the best execution obligations of brokers. HPC (Hyperliquid Policy Center) and Douro Labs (Pyth Network core contributor) jointly submitted a comment letter supporting the proposal and urging the SEC to provide principle best execution guidelines for the on-chain market.

The review letter points out that the premise of Rule 611 is that all places publish prices in advance and that the central information processing system compiles them into the best trading prices in the country, which does not match the actual execution method on the chain. AMM places do not have pre-quotes, and the price is determined by the capital pool at the moment of transaction; the on-chain order book is completely outside the central quotation system. Additionally, the SEC is required to confirm that tokenized NMS shares are still subject to the Reg NMS investor protection framework, and that protection should not change due to differences in settlement ledgers. Abolishing Rule 611 will allow the market structure to evolve through competition rather than regulatory design, and it is recommended that independent reference prices based on transparent, anti-manipulation methodologies be recognized when NBBO is missing or does not reflect on-chain conditions.

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