Last Look is currently a hotly debated topic and as in many cases like this, we should be careful that the pendulum is not pushed too far from the healthy middle. In principal, last look is a well-established market protocol that when utilised properly enables Market Makers to provide tighter spreads and better pricing. To use that famous quote “It’s death has been greatly exaggerated.”
Transparency and choice have always been at the heart of the 360T platform and recently it has extended this capability to ensure that the Last Look practice is not abused.
“Rules and arbitrary time limits are a way to deal with the challenge, however our approach is and was to transparently inform our market participants on both sides of a transaction (both Maker and Taker). The Market Taker knows about the response times of their Market Makers and the Market Makers know it in comparison to other Makers as well. Based on this, we see well-functioning checks and balances” said Carlo Kölzer, CEO 360T Group.
Market Takers on 360T have access to reporting tools that not only measure Last Look latency (which is important) but also variation of latency on a granular trade by trade basis. It is not so important how long each Market Maker takes to perform last look (although clearly less is better) but how consistent they are. Do they take longer on rejects, different currency pairs, time of day or during market events? “Having good data is important but the key is to analyze it properly and turn it into valuable information that a Market Taker can rely on to take informed decisions” added Carlo. “Last Look as a market protocol was initiated in the days of voice trading, today we have the advantage of modern technology to measure, analyse and importantly inform the Market”.
In the last 18 months 360T has made large investment in data collection, mining and analysis via the creation of a specialist unit that employs a combination of leading technology and Business Analyst skills. “We will continue to invest heavily in this area as we believe that as a neutral solution provider a properly informed market ultimately leads to a properly functioning market” added Carlo.
But just providing data, analysis and information to one side is only part of the solution. “It also means providing this data and information back to the Market Makers via regular workshops where technical, integration and performance issues can be identified along with the development of continuous improvement plan” said Carlo.
The discussion about Last Look being an industry advantage for the Market Makers as such is nothing we can share from 360T side as a market neutral trading platform. “The ACI model code which emphasizes transparency, information and choice also provides 360T with a useful guide in our thinking as well as an important venue for the Industry to come together and bring a broad focus on best practice behavior” said Carlo.
David Woolcock, Chair of the Committee for Professionalism at ACI – The Financial Markets Association welcomes 360T’s positive contribution: “We regard it as very important that the market can continue to offer a diversity of execution styles in a fair and transparent manner and which benefit end customers while upholding the values of the Model Code. It is essential that the FX industry works together on agreeing an acceptable global approach to these issues and 360T’s focus on establishing a venue in which these matters can be discussed between all the interested parties is most welcome.”
About 360T Group
360T is an independent and globally-established trading venue. Its fast growth confirms the company’s status as a provider of web-based trading technology for over-the-counter (OTC) instruments, integration solutions and related services. Since its inception in 2000, the company has developed and maintained a state-of-the-art multi-bank portal for foreign exchange, cash and money market products and FX/interest rate derivatives.
360T’s secure global transaction network enables clients to trade with greater transparency and enhanced control at every stage of the trading lifecycle. The company also offers licensing of a hosted white labelled trading technology between a scalable group of price-takers and either proprietary price providers or a rich choice of back-to-back liquidity sources. 360T´s buy-side clients are national and multinational corporate treasuries, institutional clients (asset managers, hedge funds, commodity trading advisors), broker/dealers and banks. The company is authorised under German law and regulated by the German Federal Financial Supervisory Authority (BaFin).
Headquartered in Frankfurt am Main, Germany, 360T maintains subsidiaries in New York (360 Trading Networks Inc), Singapore (360T Asia Pacific Pte. Ltd.), India (ThreeSixty Trading Networks (India) Pvt Ltd) and Dubai (360 Trading Networks LLC). Further information: www.360t.com
Media Contact 360T
Claudia Stirner, [email protected], Tel: +49 69 900 289 112