Last look

A practice of over the counter markets, principally foreign exchange, where a liquidity provider streams quotes to many recipients at once rather than posting firm orders on a single book. Because a quote travels and a request travels back, the price a request arrives against is already a little old. Last look is the provider's opportunity, measured in milliseconds, to check the request against its current price and its credit and validity rules, and then to fill it or to decline it. Until it is filled there is no trade, only a request.

The practice is governed by disclosure rather than by prohibition. The FX Global Code, published by the Global Foreign Exchange Committee, describes last look as a risk control, asks that the hold window be no longer than needed to perform those checks, states that trading on the information contained in a request during the window is inappropriate, and asks providers to publish how the check is applied. A price check applied symmetrically rejects a request when the market has moved beyond a tolerance in either direction; applied asymmetrically it fills when the move favours the provider and rejects when it does not, which is the version the Code and its critics single out.

The consequence a client meets is a rejected order rather than a worse price, and it arrives at the least convenient moment, because rejections cluster exactly when the market has just moved. That is why fill ratio and hold time, published per provider, are the figures execution analysts read rather than headline spread. What remains genuinely unsettled is the trade being made. Providers argue that without a last look they would quote wider to cover the risk of being picked off by faster participants, so the practice buys tighter streamed prices for everyone. Critics argue it hands the provider an option the client pays for in rejects, and that a firm price with a wider spread would at least be honest about the cost. Both positions are held by serious participants, and venues exist on both models.