GFXC Revises Last Look Section of the FX Global Code of Conduct

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.

Discover credible partners and premium clients in China's leading event!

Changes to Boost Credibility of the Global FX Code of Conduct Initiative

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.”

“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 Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term 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 Liquidity Providers A liquidity provider (LP) constitutes either individual and/or institution that functions as a market maker in a given asset class. Broadly speaking, liquidity providers will act as the both the buyer and seller of a particular asset, thus making a market. In the equities space, many stock exchanges rely on liquidity providers who make the commitment to provide liquidity in a given equity. These liquidity providers commit to providing liquidity in the hopes that they will be able to make a profi A liquidity provider (LP) constitutes either individual and/or institution that functions as a market maker in a given asset class. Broadly speaking, liquidity providers will act as the both the buyer and seller of a particular asset, thus making a market. In the equities space, many stock exchanges rely on liquidity providers who make the commitment to provide liquidity in a given equity. These liquidity providers commit to providing liquidity in the hopes that they will be able to make a profi Read this Term 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:

Gfxc Response Paper Dec17 by TorVik on Scribd