CMFAS RES 2B Ethics, Codes & Standards for Derivatives Dealing question: FX Global Code

CMFAS RES 2BEthics, Codes & Standards for Derivatives Dealing

A dealer quoting electronic FX prices applies 'last look' — a final check before accepting a client's trade request. Under the FX Global Code, last look:

A Must last at least ten seconds, so that the dealer can check credit and price validity
B Is prohibited for all electronic trading under the Code, whatever its purpose
C May be used only as a disclosed risk control, not to trade on the client's request in the window
D May be used to reject any trade request that would be loss-making for the dealer

Show the answer and explanation

Answer: C. May be used only as a disclosed risk control, not to trade on the client's request in the window

FX Global Code (Dec 2024), Principle 17: if used, last look should be a risk control to verify validity and/or price, with disclosure to clients of how it is applied. The dealer should not trade on the information in the client's trade request during the last-look window, except under a disclosed 'cover and deal' arrangement that passes all the volume traded in the window to the client. GFXC's 2021 last-look report adds that any delay beyond what the checks need is contrary to Principle 17.

Common mistake

Last look is a check, not a free option on the client's request.

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CMFAS RES 2B Ethics, Codes & Standards for Derivatives Dealing question: FX Global Code

Answer: C. May be used only as a disclosed risk control, not to trade on the client's request in the window

Common mistake

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CMFAS RES 2B Ethics, Codes & Standards for Derivatives Dealing question: FX Global Code

Answer: C. May be used only as a disclosed risk control, not to trade on the client's request in the window

Common mistake

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