Representatives from the Hyperliquid Policy Center and trade[XYZ] have submitted a joint letter to the U.S. Securities and Exchange Commission (SEC) with proposals to modernize the IPO process.
The key idea is to establish rules for pre-IPO perpetual contracts (IPOPs). According to the authors' description, this is a derivative that provides an investor only with price exposure to the issuer's securities prior to listing.
The instrument does not imply share ownership, allocation, voting rights, or any claims on the company. Upon the start of public trading, the IPOP should cease to exist and not transform into a "perpetual synthetic market" for a private company.
The authors of the letter claim that the first IPOP market for Cerebras lasted 13 days. They also stated that U.S. exchanges currently have 40% fewer companies listed than in the mid-1990s.
The letter lists five completed IPOP markets on Hyperliquid as examples. Among them:
- Cerebras — IPO price $185, (opened at $350);
- SpaceX — $135 and (opened at $150);
- SK Hynix — $149 and (opened at $170);
- ChangXin Memory Technologies (CXMT) — 8.66 yuan and (opened at 49.5 yuan).
The SEC was asked to consider five sets of issues: classification, disclosure requirements, listing rules, measures to ensure integrity, and a phased launch of markets in the U.S. for different investor categories with limits on leverage and positions.
It is separately noted that the instrument could be particularly useful for direct listings, where there is no pre-existing public mechanism for price discovery.
Recall that in June, the CFTC and the SEC requested public input on definitions for swaps and other derivative instruments.
end-content
