FastMatch will require all liquidity providers to use Symmetrical Last Look on ECN service from Feb 1 – Exclusive

Institutional FX electronic communication network (ECN) FastMatch has today announced that it is making significant changes to its execution methodology, and has sent a letter to clients to notify them of the changes.

FastMatch, which is partially owned by North American multinational electronic trading giant FXCM Inc (NYSE:FXCM), will conduct an update of its operating procedures which will go into effect on February 1, 2016, as follows:

Symmetrical Last Look

FastMatch is a leader in fairness and transparency. FastMatch pioneered many concepts that improved transparency among FX ECNs:

– Real time reporting of the venue’s volumes
– Public fee schedule
– Real time reporting of all trades with prices and sizes
– Real time dissemination of the FastMatch midpoint
– Indicating of every quote if it is last look vs no last look
– Indicating on the quotes the maximum last look time

In further desire to make FX institutional markets more transparent and operate a fair marketplace, FastMatch will now require all liquidity providers to use only a “Symmetrical Last Look” practice on the ECN Service. “Symmetrical Last Look” is the practice by which the same trade rejection logic is applied to all trades within the last look holding period, regardless of their P&L impact to the maker and / or taker.

Trades rejected only when an order is unprofitable to the liquidly provider by the end of the last look holding period shall be considered to be the subject of “Asymmetrical Last Look” practice.

Off Market Transactions

The ECN Service is designed to prevent transactions that are off current market trading conditions. The current Operating Procedures of the ECN Service will not match two orders if matching them would result in a transaction prices greater than 0.15% from the midpoint of the bid-ask spread (the “Protective Band”).

The new Operating Procedures of the ECN Service will not match two orders if matching them would result in a transaction priced at greater than the pip value listed at http://www.fastmatch.com/listings (reviewed from time to time) from the midpoint of the bid-ask spread (the “Protective Band”) for the relevant asset class at the time the transaction is executed. This change will enable the ECN Service to have more precise definition of the protective band per currency pair.

Photograph: Downtown Manhattan from FastMatch’s headoffice. Copyright Andrew Saks-McLeod