BoE’s Chris Salmon urges industry to comment on “Last Look” section of FX Global Code

Maria Nikolova

Principle 17 of the Code states that “During the last look window, trading activity that utilises the information from the Client’s trade request, including any related hedging activity, is likely inconsistent with good market practice”.


The so-called “Last Look” practices have been among the controversial matters for the Forex industry. That is why, when in May this year, the FX Global Code was presented, including a principle on such practices, it came barely as a surprise that a consultation concerning this principle was launched.

In a speech, delivered today, Chris Salmon, Executive Director, Markets, Bank of England, who also chairs the Global Foreign Exchange Committee, addressed the industry urging market participants to provide feedback on Principle 17 of the Code.

This Principle states:

“During the last look window, trading activity that utilises the information from the Client’s trade request, including any related hedging activity, is likely inconsistent with good market practice because it may signal to other Market Participants the Client’s trading intent, skewing market prices against the Client, which (1) is not likely to benefit the Client, and (2) in the event that the Market Participant rejects the Client’s request to trade, constitutes use of Confidential Information in a manner not specified by the Client”.

Participants are asked to say whether they agree or disagree with such a statement. They are also asked to identify specific situations where this trading activity benefits the Client.

Thus far, feedback has been controversial. Some market participants have objected to the use of last look, arguing that it is not necessary as a risk-control mechanism and moreover that it can negatively affect the outcome for the Client. Others have argued that last look is beneficial for market liquidity and pricing.

In his speech, Mr Salmon noted that the most challenging area is agreeing on the guidance that should be provided with regards to the specific topic of trading activity in the last look window.

”What is clear to me is that there is – at the very least – the potential for misuse of this specific feature, as various ongoing misconduct cases bear testament to”, Mr Salmon said.

The Code already provides guidance that aims to minimize the risks of such misconduct occurring. The underlying debate, which the consultative process seeks to resolve, is whether there are ways of reducing those risks even further. If specific, legitimate, uses of this type of trading activity are identified, these can then be catered for within the Code. But if the evidence suggests that trading in the last look window is simply inconsistent with good conduct, the relevant section of the Code will need to be updated accordingly.

The consultation is open until September 21, 2017.

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