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 May be used only as a disclosed risk control, never to trade on the client's request in the window
B May be used to reject any trade request that would be loss-making for the dealer
C Must last at least ten seconds, so that the dealer can check credit and price validity
D Is prohibited for all electronic trading under the Code, whatever its purpose

Show the answer and explanation

Answer: A. May be used only as a disclosed risk control, never to trade on the client's request in the window

Principle 17 permits last look as a risk-management tool with disclosure; the dealer must not use the information in the client's trade request to trade during the last-look window, and should not apply additional hold time to exploit price moves.

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: A. May be used only as a disclosed risk control, never 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: A. May be used only as a disclosed risk control, never to trade on the client's request in the window

Common mistake

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