LMAX Group Research Desk
LMAX Group
Previously on Jurassic FX we looked at ‘Prehedgeosaurus’. Now we are going to take a closer look at ‘Lastlookosaurus’
And so on to our old pal Lastlookosaurus who makes his glorious last stand in Principle 17. A nirvanic world where ‘last look’ is transparent and clients have the use of ‘last look’ disclosed.
Yes this is the same beast that cast its shadow over most of the scandals in the last few years. The same beast currently at the centre of a well publicised US case against a large bank and the same beast who’s abuse was highlighted in the latest CFTC fine.
Lastlookosaurus tells us in the code that Last Look may only be used as a risk control mechanism in order to verify validity and / or price. There is mention of consistency with the current market price but no mention of a timeframe for that consistency – in previous drafts a 100ms window was mentioned but that has disappeared from the latest draft of the Global Code.
There is no detail around last look but merely the mention that any trading activity and hedging activity is “likely” inconsistent with good market practice. This is wooliness of mammoth proportions!
The real T-Rex and Stegosauraus both became extinct at around the same point in prehistoric time.
The same should be true of Lastlookosaurus and Prehedgeosaurus.
Principles 11 and 17 of the Global Code are the worst examples of consensus where no-one individually actually believes in what is said collectively. The authors of the code, the working groups and the participants should stand up, speak out and reconsider this draft before it is too late. There is an opportunity for everyone involved to lead. The code is failing in its duty of care to clients, by the legitimisation of these flawed principles.
Modern day FX practitioners should not be asked to adhere to principles from a Jurassic era.
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Editors’ Picks
EUR/USD stays below 1.1850 after dismal German sentiment data
EUR/USD stays in negative territory below 1.1850 in the second half of the day on Tuesday. Renewed US Dollar strength, combined with a softer risk tone keep the pair undermined alongside downbeat German ZEW sentiment readings for February.
GBP/USD falls toward 1.3550, pressured by weak UK jobs report
GBP/USD remains under bearish pressure and extends its decline below 1.3600 on Tuesday. The United Kingdom employment data suggested worsening labor market conditions, bolstering bets for a BoE interest rate cut next month and making it difficult for Pound Sterling to stay resilient against its peers.
USD/JPY slides further below 153.00; eyes 200-day EMA amid a firmer JPY
The USD/JPY pair meets with a fresh supply on Tuesday and slides further below the 153.00 mark heading into the European session, reversing a major part of the previous day's positive move. Spot prices, however, manage to hold above the 200-day Exponential Moving Average support, around the 152.50 region, preserving a tentative bullish bias despite a shallow cushion.
Editors’ Picks
EUR/USD stays below 1.1850 after dismal German sentiment data
EUR/USD stays in negative territory below 1.1850 in the second half of the day on Tuesday. Renewed US Dollar strength, combined with a softer risk tone keep the pair undermined alongside downbeat German ZEW sentiment readings for February.
GBP/USD falls toward 1.3550, pressured by weak UK jobs report
GBP/USD remains under bearish pressure and extends its decline below 1.3600 on Tuesday. The United Kingdom employment data suggested worsening labor market conditions, bolstering bets for a BoE interest rate cut next month and making it difficult for Pound Sterling to stay resilient against its peers.
Gold pares intraday losses; keeps the red above $4,900 amid receding safe-haven demand
Gold (XAU/USD) attracts some follow-through selling for the second straight day and dives to over a one-week low, around the $4,858 area, heading into the European session on Tuesday.
Canada CPI expected to show sticky inflation in January, still above BoC’s target
Economists see the headline CPI rising by 2.4% in a year to January, still above the BoC’s target and matching December’s increase. On a monthly basis, prices are expected to rise by 0.1%.
UK jobs market weakens, bolstering rate cut hopes
In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.
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