In last week’s post, we looked at the feedback received from the market by the Global Foreign Exchange Committee (GFXC) to Principal 17 of the FX Global Code of Conduct, which discusses ‘trading in the last-look window’.
In light of the feedback, the GFXC has today issued a press release stating:
GFXC has concluded that Principle 17 should indicate that market participants should not undertake trading activity that utilises the information from the client’s trade request during the last look window.
At the same time, the GFXC also agreed that Principle 17 should clarify the conditions under which certain trading arrangements, often referred to as “cover and deal”, may be distinguished from the last look guidance.
The release went on further to state that:
In reaching this judgement, the GFXC balanced the feedback that highlighted the potential for trading activity in the last look window to benefit a client with other feedback that emphasised the risk that clients could be disadvantaged by such trading and that it could undermine the overall integrity of the FX market.
In line with the GFXC’s review process, finalised language will be shared with local FX committees before being published by the end of this year.
The GFXC also stated that they have:
Commissioned further work on two areas. These are “cover and deal” trading arrangements and disclosures regarding last look on anonymous e-trading platforms.
Full press release here