Pre-trade hedging & ‘last look’, allowed in the FX Global Code of Conduct?

This week we’ve seen a lot in the process about the global code of conduct and a lot of the issues that we raise within that. Guy Debelle, who is the chair of the FX working group charged with issuing the code of conduct, welcomed concerns to be raised from the market. I met Guy 14 months ago, and our concerns are the same, it appears the global code will allow last look, and it appears that pre-trade hedging, will be permissible, as long as they’re disclosed to the client. Put simply, it’s impossible for any client to understand all the disclosures, from all the different market participants around this opaque practice, it is impossible.


It’s very hard for LMAX Exchange to support the global code, and be asked about how we can measure adherence to this global code, whilst these two abuses in the marketplace are permissible by the global code. We’re not alone in this, I was heartened this week that XTX markets issued their new TCA tool, and in their disclosures they go a step further than the global code. They say they will not act during the last look window, and in fact they said that some of the tools they are issuing will be the death knell of last look. I sincerely hope they’re right. If you want another example, let’s look at the $7M fine issued today by the CFTC, it’s not about the entity that was fined, let’s look at the market making behaviours behind that fine and everything that went on during that time in the last look window. I ask again, for all those in charge of the global code, please end this practice most open to abuse in the FX market.

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