Last Look and FX Execution

In most electronic markets, if you hit a displayed price, the trade is done. In much of the FX spot market, it isn't — many liquidity providers reserve a short window, often 5 to 100 milliseconds, after receiving your order to decide whether to accept it. This practice is called last look. It was originally justified as a safeguard: prices move fast, and a provider streaming quotes to many clients at once needs a moment to confirm the quote a client hit hasn't already gone stale before committing capital.

In practice, last look also lets a provider reject trades that would have been profitable for the client and unprofitable for the provider — for example, if the market moved in the client's favor during that window. A provider that only rejects trades going against it, while accepting the rest, is using the window asymmetrically rather than just for stale-price protection, and this is the behavior industry codes of conduct now try to police.

The trade-off for the client is real: a venue offering last look can quote tighter headline spreads, because the provider isn't forced to honor every price against fast-moving, informed flow, but the client's actual fill rate and effective cost depend on how that provider uses its rejection window. Traders now track hold time and reject rate by provider as basic execution-quality metrics, precisely because two venues quoting the same spread can deliver very different realized costs once last look behavior is accounted for.