SEC Urged to Regulate Pre-IPO Perpetual Futures Amid Growing Demand

Hyperliquid and Trade[XYZ] have jointly called on the U.S. Securities and Exchange Commission (SEC) to create a regulatory framework for pre-IPO perpetual futures.

The two decentralized exchanges argue that these derivative products provide price exposure to a company's expected share price before its initial public offering, aiding in market price discovery.

Pre-IPO perpetual futures are a type of derivative contract that allows traders to speculate on the future value of a company without waiting for the official listing. Unlike traditional futures, they have no expiration date, enabling positions to be held indefinitely.

The SEC's increasing focus on regulating the cryptocurrency and derivatives space has created an uneven playing field, according to Hyperliquid and Trade[XYZ]. They emphasize that U.S. retail investors should have access to these products and are urging the SEC to establish clear rules for trading, custody, and investor protection.