Last Look

Last look is defined as the process where liquidity providers (LP) are rendered the chance to reject trades within a specific period.

Generally, this practice by brokers is used to mitigate risk while rendering more favorable terms to the LP.

This is due to significant risk that can arise from poorly concocted price quotes that can be used as an advantage by latency arbitragers. Not all last look settings are the same.

Last look settings tend to vary by client, trading platform, a client’s connection type, trading patterns, and whether a trader has multiple running connections or open trading platforms.

When a trading broker denies a trader’s position due to last look, traders will receive a notification along the lines of “missed trade” or “trade rejected.”

This may signify that a separate investor took your price position or that LP has rejected your trade due to not having favorable enough terms.

Should You Be Concerned with Last Look?

Most traders shouldn’t stress about having a less than satisfactory investment experience just because a liquidity provider enforces last look.

Trade rejections aren’t that common and due to most brokers supporting aggregation technology trades are generally re-routed to the next best LP.

Traders can oftentimes obtain their Last Look settings with designated brokerages to see the allotted time delay and price tolerance that are applied.

It is also known that regulators have been showing an increased interest in the last look liquidity of the foreign exchange market, where the Bank of England (BoE) has begun initiating Fair and Effective Markets Review (FEMR) within the FX industry.

Most brokers support last look as a significant risk-reduction practice, without last look liquidity providers may lose several hundreds of thousands of dollars by rendering a poor price quote for a single trade.