GFXC Publishes Last Look Guidance Paper

The final piece of the puzzle from the Global Foreign Exchange Committee’s three-year review has been slotted into place with the publication of a guidance paper on last look.

The paper comes with “strong encouragement” from the GFXC for liquidity providers to complete a Disclosure Cover Sheet to provide information on their practices and operations including last look.

The paper was developed by a GFXC Working Group and follows a draft released earlier this year and the final document “reflects the careful consideration of all the feedback that has been received.”

The headline of the guidance is that last look should be applied in a “fair and predictable manner” and that it is to be used for price and validity checks only “and for no other purpose”. It reinforces Principle 17 of the FX Global Code and in addition to urging a fair and effective process, it also recommends market participants enhance ex-ante disclosures and ensure that information is available to regularly evaluate the handling of trade requests.

“The GFXC will continue to watch developments in this area,” says GFXC chair Guy Debelle. “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.”

Alongside the last look paper, standardised Disclosure Cover Sheets for liquidity providers and for FX e-trading platforms have also been published on the GFXC website. The committee says they will be straightforward to complete and support market participants in meeting the range of disclosure and transparency principles within the Code.