The global FX code – Digging deeper on ‘last look’

06 May 2021, 21:05

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The Global FX Code has been broadly welcomed by the forex industry since its launch back in 2017. With a new consultation round now being held ahead of further expected revisions, Richard Elston, head of Institutional at CMC Connect looks at where the code has succeeded - along with where there’s still room for improvement.

Much of the debate centres around latency, how much of that is absolutely necessary to enable systems to undertake the necessary processing and whether any additional ‘hold time’ may be used by counterparties looking to gain a commercial advantage. The handling of rejected trade order information is also a point that warrants further oversight by the code. CMC Markets is strongly against this valuable information being used in subsequent real-time decision making, yet it clearly has the potential to present an opportunity for some counterparties.

But as developments continue here, to what extent should Transaction Cost Analysis (TCA) now be seen as the true metric of a counterparty’s efficiency? Standardising the way that TCA is calculated would provide further support to the code and what it is looking to achieve. With much of the current narrative revolving around disclosure and transparency, an even more granular understanding of how those orders have been executed is likely to prove critical when in comes to holding counterparties to account for their service and performance in the longer term.

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