Cboe FX To Halve Order Review Time
Posted by Colin Lambert. Last updated: January 25, 2022
In new operating procedures due to come into effect on March 1, Cboe FX is cutting the order review time (ORT) for LPs on its non-firm platforms from 70 milliseconds to 35.
The ORT is systemically enforced by the company for non-firm liquidity and no information is available to the LP before and during the window – the change is effective on both the ECN and Full Amount platforms operated by Cboe FX. If the LP fails to respond by 35ms, the request becomes a rejected trade.
Although the change is happening after the Global FX Committee updated its guidance on last look to effective preclude additional hold times, sources at Cboe FX say the change is less a response to the Code update, rather it reflects the belief that market participants no longer need 70ms to respond to a quote. While any impact from the change will be monitored, the sources do not rule out further cuts, saying all LPs spoken to regarding the latest change are ready and willing to adapt.
The halving of the last look review window makes sense given the 70ms threshold has been in place for several years. One LP spoken to about the change suggests that 35ms is a “fair reflection” of how long is required to make the appropriate checks, especially when dealing with remote counterparties. “This allows us to handle flow equally, according to the natural latencies involved,” the LP says. “The vast majority of trade requests will see a quicker response time, but if you are trading between, for example, New York and Singapore, there is a natural barrier to how quickly the data can be transmitted.”
In the new operating procedures, Cboe FX has also removed sections relating to its pre-trade disclosed venue Link Direct, which has probably been usurped by Cboe FX Point, it also makes small changes to the use of tags. The platform is now randomly assigning numeric identifiers (tags) to counterparties to reinforce the anonymity of participants. In addition, it says it will systematically prevent a trading account from being reassigned to a new tag and does not allow tags to be reused by different trading accounts.