The debate continues around last look FX pricing and whether the distribution of information is skewed towards the dealers, and away from the customers. Well, yes – it undoubtedly is, and of course that’s the reason the systems are built in that way. I am not saying whether this practice is fair or not, but the contract term “an invitation to treat” is well established in law. It comes from the Latin invitatio ad offerendum and means “inviting an offer. The person (dealer) making that offer does not intend to be bound, as soon as it is accepted. Hence the trade rejections come thick and fast on some systems.
The important part is that users of systems with last look functionality need to know that it is being used, so that the apparent tight spreads and depth of liquidity are not just another mirage in the Foreign Exchange desert.