18 August 2021

The GFXC has released a guidance paper on ‘last look’ trading within the FX market. The GFXC is also strongly encouraging liquidity providers and platforms to provide information on their trading practices and operations, including for last look, by completing a Disclosure Cover Sheet.

Last look is a practice used in electronic trading where a market  participant  has  a  final  opportunity  to  accept  or  reject  a trade request made on its quoted price. The FX Global Code sets out principles of good practice for last look and also provides illustrative examples. The new guidance paper provides further clarity to market participants about the appropriate usage of last look and is intended to be read alongside the Code.

The paper was developed by a working group comprising a broad range of market participants led by former GFXC co-Vice Chair Akira Hoshino and drew on input from the GFXC’s member foreign exchange committees from around the globe. A draft paper was published for public feedback earlier this year and the final paper reflects the careful consideration of all the feedback that has been received.

The guidance paper reinforces Principle 17 of the Code by emphasising that the last look be applied in a fair and predictable manner, and that the process is intended to be used for the price and validity checks only, and for no other purpose. The three main recommendations are to:

• Ensure a fair and effective last look process;
• Enhance ex-ante disclosures; and
• Ensure information is available to regularly evaluate the handling of trade requests.

GFXC Chair Guy Debelle commented that: “The GFXC will continue to watch developments in this area. The guidance provided in this paper should help the market move forward in a productive way. Liquidity providers adhering to these principles and providing transparency about their practices should help to give their clients greater clarity about the process. Liquidity consumers should then use this information to evaluate their execution, ask questions of their liquidity provider’s last look process, and evaluate whether to trade with liquidity providers that are using last look.”

To help address the challenges market participants can face in accessing and evaluating the information that is disclosed to them, standardised Disclosure Cover Sheets for liquidity providers and for FX E-Trading platforms have today been published.  They will be straightforward to complete and support market participants in meeting the range of disclosure and transparency principles within the Code.

In July, the GFXC published an updated version of the FX Global Code and a guidance paper on pre-hedging.

For media enquiries about today’s release or other GFXC material, please contact media@globalfxc.org.