Hyperliquid Policy Center Challenges SEC to Adopt Onchain Price Feeds for Best Execution

Hyperliquid Policy Center, in a joint filing with Pyth Network core contributor Douro Labs, is pressing the SEC to scrap Rule 611 of Regulation NMS and recognize onchain price feeds as legitimate benchmarks for best-execution compliance, according to The Crypto Basic. The proposal targets a framework built around centralized quote aggregation — the National Best Bid and Offer — that the filing argues is structurally incompatible with automated market makers, onchain order books, and continuous 24/7 settlement.

The Mechanism Mismatch

Rule 611 of Reg NMS — the trade-through rule — assumes a world where exchanges post competing quotes into a consolidated tape and the best displayed price wins execution. That architecture presupposes venue routing, deterministic opening and closing hours, and a regulator-defined "best" derived from NBBO snapshots. An AMM derives price from the liquidity pool invariant at the moment of swap; an onchain order book matches bids and asks on a single deterministic state machine. Neither produces a tradable NBBO quote in the legacy sense.

The filing's workaround: let U.S. brokers fall back on independent, manipulation-resistant onchain reference prices — Pyth's price feeds cited as the worked example — when NBBO coverage does not exist or does not apply. In practice, that would shift the best-execution attestation from a centralized quote comparison to a benchmark-quality comparison, which is a meaningfully different evidentiary standard for compliance teams.

The Conditional Trigger

This is not a free-standing rule request. The submission is structured as a contingent recommendation: if the SEC moves to repeal Rule 611, then onchain pricing benchmarks should fill the gap. Without repeal, the proposal is dormant. HPC was careful to carve out tokenized U.S. equities, which the filing says should continue to sit under Reg NMS and its existing best-execution requirements. The settlement venue — onchain or traditional — does not, in their framing, change the investor protection regime applied to the underlying instrument.

That is the load-bearing distinction for portfolio managers: per-asset regulatory treatment, not per-venue. Expect compliance officers at tokenization desks to track the docket closely, because the carve-out language is what keeps a U.S. tokenized-stock product compliant while its onchain trading layer operates under a lighter touch.

What to Track

Two execution vectors matter. First, the SEC's response window — comment letters on NMS rulemaking typically run on multi-month cycles, and the next signal will come from the Commission's rulemaking agenda rather than from rhetoric. Second, the benchmark question: if onchain pricing is admitted as a reference, the manipulation-resistance test shifts from "did the trade-through occur?" to "is the oracle-attested price defensible under stress?" Pyth's aggregation methodology, publisher composition, and confidence-interval disclosures become auditable artifacts, not marketing collateral.

For liquidity providers on Hyperliquid-style perpetual DEXs, the asymmetric upside is operational: a recognized onchain benchmark lowers legal friction for U.S. broker-dealers routing flow to AMM venues, which can in turn deepen utilization. The downside is thinner — until repeal, this remains a comment letter, not a rule. Position sizing should not shift yet, but the docket belongs on the watchlist.