The Last Look…
Posted by Colin Lambert. Last updated: May 6, 2025
Sometimes, language can tell you a lot, even if it not intended to, and I am starting to think that something that is taken for granted in the world of politics is creeping into FX – if it is remotely dodgy, obfuscate.
Naturally, ‘obfuscate’ is a family-friendly word for the phrase most of us would use, ‘baffle them with…”, but the point stands – it is becoming clear to me that if a practice is open to question, someone, somewhere, comes up with the idea of giving it a new name.
Why do I raise this? Well, at our Scandinavian conference in Copenhagen I was momentarily confused by a new phrase, one I had certainly not heard in my near-48 years in the industry, “conditional liquidity”.
If, as I was, you are scratching your head, you are probably not alone, unless you are a liquidity provider. Apparently, “conditional liquidity” is the new phrase for last look, and I suppose it does describe the process, here is a price but dealing on it is conditional upon me actually liking what you want to do.
As someone who regularly hears that last look has been dealt with by the industry (it has, but only to an extent – asymmetry anyone?), my first thought is ‘why change the phrase?’ My second was “what are they trying to hide?’
It’s a shame for those who like to use the phrase, but politicians have long ruined the chances of clever language meeting anything other than scepticism among the masses, so why change it?
I had a chat with a few people and did not receive a convincing answer, but there was widespread belief that the FX market is trying to rid itself of what many still see as the stigma of last look. The strategy may well work, but it is interesting how many think there is a nasty whiff around last look in the first place – this is not what you would expect discussing a problem that has been “solved”.
This is not the first time such tactics have been tried – someone, somewhere, took what looked and sounded like front-running, and decided it should be called “pre-hedging”. This was then evolved into “pre-hedging” and “hedging ahead of the Fix” – anything to avoid actually describing what takes place.
Who on earth is going to read a column entitled “Conditional Liquidity”?
The concern for those pushing “conditional liquidity” is that “pre-hedging” has failed miserably to blind opponents to what it actually is – in fact I would say that I think the industry is getting more concerned about the practice – and I suspect the new phrase will also fail.
Different countries have different names for it, but political statements have to pass what some call “the sniff test” or “the pub test” – in other words, does the ordinary punter believe it? “Conditional liquidity”, along with “pre-hedging”, fail this test, because one’s first thought is, as noted, “what are they trying to hide?” If there’s nothing wrong with front running, why not call it that? Why change it to “pre-hedging”?
Likewise, if there is nothing wrong with last look (and I accept it is needed in certain circumstances but should be subject to strict asymmetry), why try to confuse people with a new phrase for it? It just raises suspicions.
So, to those clever people out there who think this sort of thing works – it doesn’t. The financial markets industry is too sophisticated not to smell a rat, and if they don’t like last look, they’ll hate conditional liquidity. All you are doing by changing the name is drawing attention to the issue, rather than averting it.
More to the point, and of paramount concern, who on earth is going to read a column entitled “Conditional Liquidity”?
