{"id":65552,"date":"2018-02-23T00:12:16","date_gmt":"2018-02-23T00:12:16","guid":{"rendered":"http:\/\/www.bnreport.com\/funds-try-to-limit-controversial-last-look-forex-trading\/"},"modified":"2018-02-23T00:12:16","modified_gmt":"2018-02-23T00:12:16","slug":"funds-try-to-limit-controversial-last-look-forex-trading","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/funds-try-to-limit-controversial-last-look-forex-trading\/","title":{"rendered":"Funds try to limit controversial “last look” forex trading"},"content":{"rendered":"

The world\u2019s largest asset managers today tried to clamp down on the controversial \u201clast look\u201d practice which allows banks and brokers to reject orders even after a price has been agreed, although it faced concern from industry that it does not go far enough.<\/p>\n

The Investment Association (IA) today said those liquidity providers like banks and brokers should be forced to explain their reasons if they do reject a trade, in a bid to \u201cshine a light\u201d on the practice.<\/p>\n

The IA, which represents a host of the world\u2019s largest asset managers such as Blackrock and J.P. Morgan, said there are certain situations where last look should \u201cno longer be considered acceptable due to the potential for misuse of information by the liquidity provider\u201d, although it stopped well short of calling for a complete ban.<\/p>\n

Read more<\/strong>: BoE launches new money market code of conduct \u2013 but it's not regulation<\/a><\/p>\n

The IA\u2019s call for transparency is \u201cvery worthy, but I'm not sure it has gone far enough,\u201d said David Mercer, chief executive of London-based LMAX Exchange.<\/p>\n

Last look is the controversial practice in which liquidity providers can reject currency orders \u2013 even when buyers meet the price quoted. It allows providers to quote a tighter spread, theoretically lowering costs, but it is also open to abuse.<\/p>\n

The IA said last look should not be used for firms to hedge their exposures before a client\u2019s trade is carried out, or to trade using knowledge of orders which either have not been completed or which are rejected.<\/p>\n

Critics of last look say it allows liquidity providers to profit at the expense of their clients, including large investment trading firms, by rejecting orders if the currency moves against them.<\/p>\n

Read more<\/strong>: Long-awaited FX global code of conduct is published<\/a><\/p>\n

The practice can also mean that quoted prices are not actually available, hiding liquidity problems until it is too late.<\/p>\n

Mercer, an outspoken critic of last look, told City A.M. the IA had been left in an \u201cinvidious position\u201d defending an industry standard which will be impossible to police. The standard, laid out in last May\u2019s voluntary FX global code of conduct from the Bank of England<\/a>, was criticised at the time for not cracking down on last look.<\/p>\n

\u201cIt's entirely possible for trading to happen in the last look window and comply with the code,\u201d Mercer said. \u201cHow are you ever going to police pre-trade hedging?\u201d<\/p>\n

He added: "Nine months on from the introduction of the global code of conduct and only a limited number of institutions have signed up to the code. The industry should, therefore, be evaluating the success of the code in light of this slow adoption rate and questioning what can be done to improve the number of signatories."<\/p>\n

Galina Dimitrova, director of investment and capital markets at the IA, said: \u201cInvestors have long been concerned about the lack of transparency around last look.<\/p>\n

She said the guidelines will \u201cprovide asset managers with much-needed information on their trades so that they can fully understand the impact of last look on their business.\u201d<\/p>\n

Read more<\/strong>: FX markets: when less risky means more risky \u2013 and helps China's renminbi<\/a><\/p>\n

<\/a><\/strong> <\/a><\/p>\n

Original Article<\/a><\/p>\n

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CityAM<\/a><\/h5>\n

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The world\u2019s largest asset managers today tried to clamp down..<\/p>\n","protected":false},"author":1,"featured_media":65553,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[],"class_list":["post-65552","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nFunds try to limit controversial "last look" forex trading - Business News Report<\/title>\n<meta name=\"description\" content=\"The world\u2019s largest asset managers today tried to clamp down..\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bnreport.com\/en\/funds-try-to-limit-controversial-last-look-forex-trading\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Funds try to limit controversial "last look" forex trading - 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