State Street is latest LP to publish a GFXC disclosure sheet

More liquidity providers expected to publish disclosures this week following GFXC deadline


State Street has become the latest liquidity provider in the foreign exchange market to publish a disclosure sheet detailing its approach to a range of FX trading practices – meeting the Global Foreign Exchange Committee’s (GFXC) end-of-July deadline.

In the bank’s newly uploaded disclosure sheet, which provides clarity on a number of electronic trading practices, it explicitly states that no additional hold time is placed on client trades “over and above the time taken to complete last look checks”, such as a price tolerance check, a credit check, and a market risk check.

State Street could not be reached for comment at the time of publication.

Last look is broadly comprised of two elements: a price validity check and a credit check. However, many liquidity providers have historically placed an additional hold time of as much as 300 milliseconds on top of these checks to monitor client behaviour.

State Street has previously never confirmed whether an additional hold time is applied to clients subject to last look checks. The bank did not respond to a request for comment when asked by FX Markets to clarify its stance on additional hold times in both 2019 and 2021.

But since the conclusion of the GFXC’s three-year review of the FX Global Code of Conduct in July 2021, the committee has urged all FX market LPs to use template disclosure sheets to detail their approach to trading practices such as last look, pre-hedging and anonymous trading in order to allow market participants to make more informed decisions about their trading partners.

Following comments last September by Guy Debelle, then chair of the GFXC, and by the UK Financial Conduct Authority in November, hold times are increasingly regarded as running contrary to the FX Global Code.

Many banks – most recently Barclays – have since removed the hold time they once applied to client trades subject to last look.

However, uptake in the number of disclosures published by LPs has been mixed. At a recent GFXC meeting in Zurich, the committee encouraged all LPs to have published a disclosure sheet by the end of July.

An FX Markets investigation last month revealed that 11 of the top 25 LPs in the FX space, or 44%, had not published such a disclosure – including State Street.

At the time of writing, eight of those top 25 LPs, or 32%, are yet to publish a GFXC disclosure sheet – including Crédit Agricole, HC Tech, ING, Jump Trading, Nomura, Santander, Societe Generale and Virtu Financial.

One of the previous GFXC disclosure sheet holdouts, Bank of America, published a disclosure sheet on its own website on July 12. While it states that the US bank’s last look window typically ranges from 0 to 50 milliseconds based on whether “the client trading channel supports manual or automated trading or single or multi-bank price stream aggregation”, it doesn’t specify whether an additional hold time is imposed on clients during that period.

The bank’s stance on additional hold times becomes blurrier when reading the 2021 version of its last look policy – a policy that has a link provided to it within the bank’s GFXC disclosure sheet.

In that policy, Bank of America states that its last look process includes “a delay” of approximately 0 to 50 milliseconds to evaluate the client’s offer against the bank’s assessment of the current market – “adjusted for any applicable rate tolerance”.

Bank of America declined to comment when asked by FX Markets to clarify its current stance on additional hold times.

Meanwhile, another previous holdout, Flow Traders, has had a GFXC sheet publicly available since July 15 – the same day the 20 millisecond additional hold time it previously imposed on clients when trading anonymously was removed.

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