The Global Foreign Exchange Committee (GFXC) has published an updated version of the Global FX Code of Conduct today. The document includes a long-discussed amendment to the Principle 17, which is relating to last-look practices.
According to the revision, market participants should not undertake a trading activity that utilizes information from the client’s trade request during the last look window. The amendment is describing the conditions under which specific trading arrangements (sometimes referred to as ‘cover and deal’) may be distinguished from this guidance.
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Commenting on the news, the Chair of the GFXC, Chris Salmon, said: “The revised guidance on last look demonstrates that the GFXC is committed to ensuring the FX Global Code keeps pace with a fast evolving market.”
“This will support our objective of improving market practice and rebuilding trust in the FX market. With the last look consultation completed, the priority for the first half of 2018 is to promote widespread commitment to the Code,” he elaborated.
The Vice-Chair of the GFXC and CEO of CLS, David Puth, added: “Since the launch of the Code in May, the GFXC has been working to resolve outstanding issues and consistently identify new areas of focus to ensure that the principles evolve seamlessly with good market practice.”
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“We received meaningful market feedback to which the GFXC responded appropriately and in a timely manner. Our focus will now shift to encouraging the broad adoption of the Code by all major market participants during the first half of 2018,” he concluded.
The GFXC has reached an agreement to continue working on the global adoption of the Code. The document will be publicised across all areas of the FX industry. As part of the effort, new associate members will be welcomed to the committee to expand the geographical expansion of the Code.
Commenting on the announcement, the Chief Operating Officer at ParFX, Roger Rutherford, added: “We welcome the revised guidance by the GFXC relating to last look in FX. It is clear there is scope for misconduct to occur if trade information gained during the last look window is utilized by the liquidity provider to execute a trade, for example, or if the liquidity provider always intended to reject the trade to learn more about a counterparty’s position in the market.”
“Such behavior does not conform with the letter and spirit of the FX Global Code, and the revised language provides clear guidance in this respect. We encourage liquidity providers in the FX market to be transparent with their customers and make their policies relating to last look clear in their trading agreements. This way, counterparties can easily decide whether to trade with a liquidity provider that offers last look pricing, or not,” he explained.
The full details are available in the paper published by the GFXC earlier today: