The Foreign Exchange Professionals Association (FXPA) has announced the addition of FXSpotStream as the latest member of the group of foreign exchange markets participants. The news comes at a time when the association has highlighted for its members the importance of reviewing their practices on ‘last look’ following the $150 million fine imposed on Barclays.
The CEO of FXSpotStream, Alan Schwarz stated: “As a bank-owned consortium bringing greater transparency and efficiencies to the FX market, FXSpotStream is pleased to join the Foreign Exchange Professionals Association and support its goals of ensuring a sound, transparent and competitive marketplace.”
Highlighting Last Look Challenges
Earlier this week the FXPA hosted a webinar for its members, where legal experts highlighted that business practices about last look are going to come under scrutiny by the regulators.
“This is a crucial time for our markets, and FXPA is taking a proactive approach. By coming together and collectively educating key regulators and policy makers, the news media and general public, FXPA aims to play a constructive role in helping to shape the future of the FX market,” an FXPA spokesperson stated.
Opening with an overview of the FXPA’s recently published “Focus on Last Look” educational paper on the subject by Chip Lowry, senior managing director at State Street Global Markets and chair of FXPA’s Policy Committee, lawyers from Steptoe & Johnson, partners Jason Weinstein and Michael Miller, took up the baton.
Barclays $150 million Settlement Opens Doors for NYDFS
Looking at the prospective investigators following the $150 million last look settlement by Barclays, lawyers speaking on the webinar said reviews of last look use is advisable, due to the strong likelihood that regulators are going to further scrutinize institutions on the matter.
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The New York Department of Financial Services (NYDFS) is expected to continue using its powers to enforce changes to the foreign exchange market.
Two of the speakers on the webinar, lawyers from Steptoe & Johnson, partners Jason Weinstein and Michael Miller have elaborated on the current regulatory stance.
“The Department of Justice has never been more aggressive in going after financial institutions and it’s never been more expensive to have the DoJ come after you. For those firms that have a last look program, look very carefully at the way that it operates, look very carefully at what you say to customers about how it operates and look very carefully at your compliance procedures,” said Mr Weinstein.
Be First to Review Your Last Look Practices
The lawyers stated that for companies which might potentially be affected, it is much more expensive to respond to an investigation than to conduct their own internal review first.
Mr Miller further elaborated: “If there’s anything that we’ve learned, it’s that if you get out in front of regulators and law enforcement officials in terms of identifying practices that need to be corrected and then doing so before you draw any fire, that’s enormously helpful.”
FastMatch has become the first electronic communications network to highlight the importance of lucidity providers on its venue using symmetric last look. While some liquidity providers have been slow to respond to a new market, changes in their practices are only a matter of time according to the professionals that FXPA brought to the table.
“On the back end of the Barclays case, you’re going to see a lot of market pressure moving participants in this industry in the direction of changes which give the market makers the protection that they need, but at the same time don’t disadvantage customers across the board. I think that market forces will do that,” said Miller.