Hyperliquid, Douro Labs urge SEC to drop trade-through rule
Regulation & Gov ·
Two crypto entities argue a decades-old equity market rule does not fit onchain trading venues.
Hyperliquid Policy Center and Douro Labs have petitioned the U.S. Securities and Exchange Commission to repeal the trade-through rule under Regulation NMS, according to wublockchain.xyz. The trade-through rule, a component of Reg NMS, generally requires that trades execute at the best available price across exchanges, a mandate built for the structure of traditional equity markets.
The petition contends that this framework is misaligned with how onchain markets and automated market makers actually operate, per wublockchain.xyz. Rather than routing orders across a patchwork of centralized exchanges to find a single best price, decentralized venues rely on algorithmic liquidity pools and continuous pricing mechanisms that do not map cleanly onto the trade-through requirement's original design.
The filing frames this as a structural mismatch rather than a mere compliance inconvenience. Hyperliquid Policy Center and Douro Labs are asking regulators to recognize that the rule's assumptions about fragmented order routing and price discovery do not translate to AMM-based systems, where pricing and execution happen through onchain logic rather than competing order books.
This petition is part of a broader wave of proposals reshaping how crypto protocols and regulators interact, spanning governance forums, on-chain votes, and formal regulatory dockets. In DeFi generally, proposals function as structured requests for change, whether submitted for token-holder ratification or, as in this case, directed at a government body through a formal comment process.
What remains unresolved is how the SEC will respond to the specific request to eliminate the trade-through rule for onchain markets, and whether the agency will treat AMM-based trading as categorically distinct from equity market structure under Reg NMS. The petition's reception, and any timeline for SEC action, has not yet been detailed.