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[ M A R K E T R E V I E W | F O R E I G N E X C H A N G E ] good practice and increases client confidence in the market participant. The European Central Bank and other central banks have already ‘invited’ their FX counterparties to sign up,” Gladwin says. “However, this also highlights a reputa- tional risk, where an institution publicly adheres, then at some point in time is shown to be in breach of some of the principles.” Monitor, measure, maintain Major banks were quick to approach technology vendors looking for guidance on efficient methods of compliance with the Code. David Faulkner, managing director at Fluent Trade Technologies, a provider of FX trading systems, explains that better technology in a general sense is key for buy- and sell- side firms aiming to comply with the Code through increas- ing transparency and reducing risk. “We work with many of the top tier banks, including 6 of the top 15 FX banks, and we are in the process of onboarding more. Over the past year most of our clients and prospects have asked how our technology platform can help them ad- here to the Code,” Faulkner says. “The answer is that market data, plus trade and order information in microsecond res- olution assists with best execution, timely risk management and provides an audit trail of all market activity.” As an example, Principle 17 of the FX Global Code of Con- duct states that market participants employing the somewhat controversial ‘Last Look’ method, should be transparent regarding its use and provide appropriate disclosures to cli- ents. Last Look affords liquidity providers such as banks the opportunity to decline or accept a trade request, but industry bodies like The Investment Association have raised concerns recently that it is no longer acceptable due to misuse of information. The Investment Association highlighted various misuses earlier this year, including pre-hedging during the Last Look window, and trading based on information derived from rejected trades or from a request for quotation in progress or not yet won. Faulkner adds that minimising latency within the whole trading technology stack is key to ensuring Last Look hold times are reasonable and acceptable to liquidity providers, their clients and for adherence to the Code. Ultra-low latency “The faster a technology connectivity also ensures that all components of pricing and booking platform can manage risk trades are completed faster – processes, the more the risk is from consuming market data and connecting with credit systems, to reduced.” publishing prices and updating risk DAVID FAULKNER, MANAGING DIRECTOR, systems. “The faster a technology FLUENT TRADE TECHNOLOGIES platform can manage risk process- es, the more the risk is reduced,” Issue 56 // // 69