Hyperliquid and Douro Labs Back SEC Plan to Rescind Rule 611

The Hyperliquid Policy Center (HPC) and Douro Labs, a major contributor to the Pyth Network, have officially expressed their support for a proposal by the U.S. Securities and Exchange Commission (SEC) to rescind Rule 611. This regulation, commonly known as the "Order Protection Rule" or the "best execution" rule, has served as a cornerstone of Regulation NMS (National Market System) for years. By advocating for its removal, these entities aim to modernize the regulatory framework to better accommodate the rapid growth of on-chain markets and decentralized trading infrastructures.

Limitations of Traditional Quote Systems

In a joint comment letter submitted on August 17, 2026, HPC and Douro Labs argued that Rule 611 is increasingly incompatible with modern financial technology. The current rule relies heavily on the National Best Bid and Offer (NBBO) system, which aggregates data through centralized Securities Information Processors (SIPs). The organizations noted several critical issues with this legacy model:

• Rule 611 is designed for centralized exchanges, making it difficult to adapt to Automated Market Makers (AMMs) and on-chain Central Limit Order Books (CLOBs).
• DeFi mechanisms often operate without relying on the pre-trade quotes required by SIPs.
• The existing rule fails to accurately capture or reflect the actual transaction prices of Tokenized Securities traded directly on the blockchain.

The proponents suggest that the latency and architectural constraints of centralized SIPs hinder the efficiency of decentralized liquidity pools.

Advocating for a Principles-Based Framework

The joint letter calls for a synchronized update to the "best execution obligation" guidelines for brokers, moving away from rigid technical mandates toward a principles-based approach. This shift would allow for the integration of transparent, manipulation-resistant systems that align with the nature of distributed ledger technology (DLT). According to the contributors, a more flexible regulatory stance would foster innovation within the Pyth Network and other high-speed data ecosystems that provide real-time price feeds for a wide array of digital assets.

"The rescission of Rule 611 would pave the way for a market structure that recognizes the unique capabilities of on-chain trading, ensuring that transparency and execution quality are maintained without stifling technological progress."

The proposed changes are expected to benefit the broader Ethereum and Solana ecosystems, where many tokenized assets currently reside. By removing the requirement to adhere to centralized quote benchmarks, developers can focus on optimizing liquidity and reducing slippage within decentralized protocols.

The support from Hyperliquid and Douro Labs highlights a growing consensus among crypto-native institutions that traditional market regulations require significant reform to remain relevant. As the SEC evaluates the feedback on the rescission of Rule 611, the industry remains focused on establishing a framework that balances investor protection with the technical realities of decentralized finance (DeFi) and on-chain settlement.