News Detail

ACI Formal Response on Last Look

Image: ACI - The Financial Markets Association

We agree that trading activity that utilises information from the trade request is inconsistent with good market practice. Furthermore we consider that such activity, when undertaken by market participants acting as principals as defined in Principle 8 of the GCC, is inconsistent with good market practice and thus the word “likely” should be removed. 

Question 1 As noted above, the Code states that “During the last look window, trading activity that utilises the information from the Client’s trade request, including any related hedging activity, is likely inconsistent with good market practice because it may signal to other Market Participants the Client’s trading intent, skewing market prices against the Client, which (1) is not likely to benefit the Client…” Do you agree or disagree? Are there specific situations where this trading activity benefits the Client? In those situations is such trading activity related to the validity or price checks that the Code states as the purpose for last look? Please provide reasons for each response.

  • We agree that trading activity that utilises information from the trade request is inconsistent with good market practice. Furthermore we consider that such activity, when undertaken by market participants acting as principals as defined in Principle 8 of the GCC, is inconsistent with good market practice and thus the word “likely” should be removed.

In order to provide clarification we consider that the Code should state:  “During the last look window, trading activity, undertaken by market participants acting as principals as defined in Principle 8 of the Global Code of Conduct, thatutilises the information from the Client’s trade request, including any related hedging activity, is inconsistent with good market practice because it may signal to other Market Participants the Client’s trading intent, skewing market prices against the Client. 

  • Other than circumstantial evidence that the ability of market participants to employ Last Look techniques leads to tighter market pricing,(albeit pricing that results in more frequent trade rejection), we can find no firm evidence or specific situations where there is any likely benefit to Clients from trading activity by market participants in the Last look window.
  • ACI International
  • 1 month ago
  •    

News from ACI International

The ACIFMA have also revised the pass mark for the Operations Certificate which is now aligned wi