Global Foreign Exchange Committee updates on approach to “last look” practices

Maria Nikolova

The Committee recommends that market participants should not undertake trading activity that utilises the information from the client’s trade request during the last look window.

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The Global Foreign Exchange Committee (GFXC) has provided an update on its approach to “last look” practices. The body said that during its meeting on November 14, 2017, there was a discussion about the feedback received to its Request for Feedback on Last Look practices in the Foreign Exchange Market.

Global Foreign Exchange Committee had 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”.

In light of the feedback received, the GFXC has concluded that Principle 17 should indicate that market participants should not undertake trading activity that utilises the information from the client’s trade request during the last look window. At the same time, the Committee also agreed that Principle 17 should clarify the conditions under which certain trading arrangements, often referred to as “cover and deal”, may be distinguished from the last look guidance.

In line with the GFXC’s review process, finalised language will be published by the end of this year.

In addition, the GFXC has commissioned further work on two areas. These are “cover and deal” trading arrangements and disclosures regarding last look on anonymous e-trading platforms. In both cases the objective is to determine whether the GFXC should enhance its guidance about good market practice, potentially through the development of additional illustrative examples for the Code.

Separately, the GFXC reaffirmed the importance of expanding the global reach of the Code and agreed a number of steps to secure this outcome.

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