Executive Summary: Execution quality can make or break a trading strategy. Yet one of the most misunderstood mechanisms in FX markets is last look, a brief window that shapes fills, rejections, and ultimate profitability.
Key Takeaways
- Last look is an execution mechanism allowing liquidity providers a brief window (typically milliseconds) to validate pricing before confirming a trade
- No last look execution guarantees fills at quoted prices but typically comes with wider spreads
- The difference between these models represents a fundamental tradeoff between price accuracy and execution certainty
- Transparency, disclosure, and consistency matter more than which model is used
Introduction
In electronic trading, the milliseconds between quote and confirmation determine whether a trade succeeds or fails. For Forex participants navigating decentralized OTC markets, understanding execution models isn’t optional, it’s essential.
Last look and no last look execution represent two fundamentally different approaches to managing latency, risk, and pricing integrity. Yet confusion persists. Traders often view last look as a hidden disadvantage. Brokers struggle to explain rejection patterns to clients. And liquidity providers defend the mechanism as essential risk management.
This comprehensive guide cuts through the misconceptions. You’ll learn exactly how these execution models work, why they exist, and what they mean for your trading outcomes, whether you’re a retail trader, institutional investor, or brokerage operation. For a broader overview of building a trading business, explore our guide on forex broker turnkey solutions.
What Is Last Look Execution?
Last look refers to a brief decision window during which a liquidity provider reviews an incoming order before confirming execution. After receiving a trade request, the provider evaluates whether the quoted price remains valid given current market conditions. Within milliseconds, they either accept the trade, reject it entirely, or issue a requote.
This mechanism exists primarily in over-the-counter FX markets, where prices are streamed continuously rather than matched on centralized exchanges. Unlike equity markets with centralized limit order books, Forex liquidity depends on bilateral relationships and streaming quotes that require real-time validation. To understand the source of this liquidity, you can review our list of top liquidity providers.
Additional Hold Time Explained
The technical term for this window is additional hold time (AHT). You may also encounter these related terms:
- Last look window – The duration during which review occurs
- Order review time (ORT) – Another name for the validation period
- Last look threshold – The maximum configured AHT on a venue
- Last look round trip time – The realized delay including network and processing
Most venues impose maximum AHT thresholds, though realized hold times typically run much lower. On major FX platforms today, average last look hold times hover around 10 milliseconds, barely perceptible to human traders but significant in high-frequency environments.
Why Last Look Exists in FX Markets
Last look didn’t emerge to disadvantage traders. It developed as electronic trading accelerated and market participants needed protection against specific risks.
Managing Latency and Price Risk
Even tiny delays between quote distribution and order arrival expose liquidity providers to losses. In volatile conditions, prices can move significantly within milliseconds. Without validation mechanisms, providers would routinely execute trades at prices that no longer reflect actual market conditions.
Last look acts as a safeguard against stale pricing. It allows providers to confirm the market hasn’t moved materially since the quote was published, during transmission, or throughout routing and processing. The technology used to connect to these providers often relies on protocols like FIX API for speed and reliability.
Protection Against Adverse Selection
Adverse selection occurs when sophisticated participants systematically trade against providers only when market conditions have moved in their favor. High-frequency strategies can exploit brief pricing inefficiencies, profiting at the expense of liquidity providers.
Last look reduces the profitability of such latency arbitrage by allowing providers to reject trades triggered by outdated quotes. This protection enables providers to offer tighter spreads than they could sustain under guaranteed execution models.
Handling Volatility and Market Gaps
Certain conditions amplify execution risk:
- Economic news releases
- Session opening hours
- Swap rollovers
- Low-liquidity periods
During these moments, prices can gap without intermediate liquidity. Last look helps providers avoid processing trades at prices that would immediately require aggressive hedging or result in certain losses.
How Last Look Works in Practice
Understanding last look mechanics requires examining what happens during those critical milliseconds.
Accept, Reject, or Requote
When a liquidity provider receives an order during the last look window, they evaluate several factors:
Price movement – Has the market moved beyond predefined limits since the quote was streamed? Risk parameters – Does this order exceed position limits or create unacceptable exposure? Latency thresholds – Did the order arrive within acceptable timing parameters?
Based on this evaluation, three outcomes are possible:
Acceptance occurs when the market hasn’t moved materially and all risk checks pass. The trade confirms at the requested price.
Rejection happens when the price has moved too far or the order fails a risk check. The trade doesn’t execute, and the trader must resubmit at current prices.
Requotes occur when the provider doesn’t reject outright but issues a new price reflecting current market conditions. The trader can accept the new price or decline.
A Concrete Example
Consider a trader submitting a market order to buy EUR/USD during a news release. The streamed price shows 1.0850, but within milliseconds, the market jumps to 1.0854.
During the last look window, the liquidity provider detects that the original quote no longer reflects executable prices. Rather than filling at 1.0850 and absorbing the loss, they reject the order or issue a requote at 1.0854.
From the trader’s perspective, the order seems to disappear or reprice unexpectedly. But the mechanism prevented an execution that would have immediately moved against the position.
Timing Variations
Last look windows aren’t universal. Different providers apply different thresholds based on:
- Asset class and pair volatility
- Order size
- Market conditions
- Client relationship and history
- Internal risk appetite
Shorter windows mean fewer rejections but higher provider risk. Longer windows give providers more protection but increase rejection rates for traders.
What Is No Last Look Execution?
No last look execution removes the discretionary review window. When a liquidity provider quotes a price under this model, that price represents a firm, executable commitment.
Under no last look, if an order reaches the provider’s system while the quoted price remains active, execution occurs immediately at that price. Rejection only happens if:
- The order arrives after the price has already updated or withdrawn
- The order violates pre-agreed parameters like size limits
- Technical issues prevent processing
This deterministic behavior makes execution outcomes more predictable, particularly valuable for strategies dependent on reliable fills. The platforms that facilitate this, such as MT5 or cTrader, must be robust enough to handle this speed.
Why Some Markets Prefer No Last Look
Certain participants favor no last look because it eliminates the uncertainty introduced by discretionary rejection windows.
High-frequency traders and market makers often prefer this model because their strategies depend on precise timing and predictable outcomes. When every millisecond matters, not knowing whether a trade will face post-submission review introduces unacceptable uncertainty. For firms using a prop trading model, this predictability is critical for risk management.
Execution transparency also drives preference for no last look. When rules are deterministic rather than discretionary, participants can better understand why trades fill or fail. This clarity supports more accurate strategy backtesting and performance analysis.
The Tradeoff: Wider Spreads
No last look doesn’t eliminate execution risk, it redistributes it. Providers operating without last look protection must price defensively to account for guaranteed execution commitments.
The result? Typically wider spreads compared to last look environments. This pricing adjustment reflects the additional risk providers assume by removing their ability to validate orders post-arrival.
For traders, the choice becomes: tighter spreads with occasional rejections, or wider spreads with guaranteed fills?
Last Look vs No Last Look: How They Differ
Last Look Execution
- Timing: Providers evaluate orders during a brief window after receiving them, before deciding whether to execute
- Rejection causes: Orders may be declined if markets moved during the window, if risk limits would be exceeded, or if credit checks fail
- Pricing impact: The safety net allows providers to quote tighter spreads, knowing they can step back if conditions shift
- Verification: Traders can monitor rejection rates and policies but cannot see why individual orders were declined
- Risk allocation: Traders face the possibility of rejection after committing, requiring resubmission at potentially worse prices
- Best suited for: Cost-sensitive strategies where occasional rejections are acceptable in exchange for better headline pricing
No Last Look Execution
- Timing: Quotes are firm commitments; execution is automatic upon receipt as long as the price is still available
- Rejection causes: Declines happen only when the quoted price has already been updated or withdrawn, or for pre-agreed size limits
- Pricing impact: Providers build the cost of guaranteed execution into their quotes, resulting in wider but dependable spreads
- Verification: Every fill or rejection can be checked against the exact quoted price at the moment of order arrival
- Risk allocation: Providers bear the full risk of market moves during the brief period between quoting and execution
- Best suited for: Time-sensitive strategies, automated trading systems, and any approach where execution certainty is paramount
Execution Quality: Beyond Fill or Reject
Traders often reduce execution quality to a binary question: did the trade fill or not? While fill rates matter, this framing overlooks critical dimensions affecting real trading outcomes.
Slippage Behavior
Slippage, the difference between expected and actual execution prices, varies significantly across models. For more on this, see our dedicated guide on slippage management for brokers.
Last look environments may show lower slippage on accepted trades because providers validate pricing before confirmation. However, rejected trades that must be resubmitted can experience effective slippage when prices move between attempts.
No last look environments guarantee execution at quoted prices if available, but those quotes may include wider spreads that effectively increase transaction costs.
Consistency Matters
An execution model producing predictable outcomes, whether through reliable fills under no last look or transparent rejection policies under last look, provides more value than one with opaque or inconsistent behavior.
For brokers and venues, measuring execution quality requires looking at aggregated performance:
- Average slippage across market conditions
- Fill consistency during volatility
- Rejection patterns correlated with price movements
- Total execution cost including spread and market impact
The Information Asymmetry Question
Last look critics raise legitimate concerns about information asymmetry. During the review window, providers can observe incoming order flow while deciding whether to accept. This creates a scenario where the price taker submits orders on staler information than available to the provider at the decision point.
The concern: liquidity takers may receive fills on trades that perform poorly while experiencing rejections on trades that would have been profitable. This pattern creates an implicit transaction cost beyond visible spreads or commissions.
Industry bodies have responded by establishing standards around last look disclosure. The Global Foreign Exchange Committee (GFXC) emphasizes transparency, symmetry, and fair treatment regardless of execution model.
How Different Trading Strategies Are Impacted
Execution model preferences vary significantly across participant types and strategy approaches.
High-Frequency Trading
HFT strategies typically favor no last look execution. These approaches depend on precise timing and predictable fills. Every rejected order represents not just lost opportunity but potential strategy disruption. The wider spreads associated with no last look are often acceptable given the certainty required.
Market Making
Market makers similarly benefit from deterministic execution. Managing inventory risk through rapid hedging requires confidence that executed prices will actually fill. Unpredictable rejections can leave positions exposed. This is a core concept of what is market making.
Discretionary Trading
Longer-term position traders may be less sensitive to execution certainty and more focused on minimizing spread costs. For these participants, last look execution with tighter spreads can offer better value. Occasional rejections during entry or exit are less disruptive to overall strategy performance.
Institutional Flow
Institutional participants demand both predictability and fairness. Many buy-side firms now evaluate execution quality through sophisticated transaction cost analysis (TCA) that tracks rejection patterns, slippage distributions, and AHT metrics across providers.
Some institutions trade exclusively on venues without last look. These pools, often described as central limit order book (CLOB) or order-cross-order (OXO) venues, offer deterministic execution though typically with wider spreads and lower available volume. Understanding the broader landscape, such as the differences between buy-side and sell-side liquidity, is crucial here.
Transparency and Best Execution
Last look becomes problematic only when poorly disclosed or applied asymmetrically. Regulators and industry bodies emphasize several principles:
Clear Disclosure
Trading venues must clearly communicate:
- Whether last look is used
- Typical and maximum hold times
- Rejection criteria and historical rates
- How clients can monitor execution quality
When these factors are transparent and consistently applied, last look can operate with high market integrity.
Symmetric Application
Execution must treat favorable and unfavorable price movements consistently. If trades reject only when prices move against the provider, while accepting trades that move in their favor, execution quality deteriorates and trust erodes.
Predictability
Clients should understand what to expect, especially during volatile conditions. Predictable execution, even with occasional rejections, beats unpredictable behavior with occasional surprises.
Industry Trends: The Move Toward Tighter Windows
Recent years have seen meaningful industry progress on last look transparency and duration.
Declining Hold Times
According to CME Group data, average last look hold time on the EBS platform was 12 milliseconds in 2022, with a maximum threshold of 200 milliseconds. By 2025, averages on major platforms dropped to around 10 milliseconds.
Given that pre-trade risk checks can now execute with sub-microsecond latency, these figures suggest only a small fraction of AHT now relates to actual risk or operational validation. Modern forex CRM solutions and back-office systems play a key role in these checks.
Platform Reductions
Major venues continue tightening windows:
- EBS reduced its last look threshold to 30 milliseconds in 2023
- Cboe FX implemented two-phase reductions in 2025: from 35 to 20 milliseconds in April, then to 10 milliseconds in October
These trends reflect industry consensus that last look should serve genuine risk management rather than discretionary optimization.
Transparency Tools
Venues now provide sophisticated monitoring tools. Transaction cost analysis (TCA) platforms report AHT distributions across percentiles. Some providers, including major banks like Goldman Sachs, maintain public last look disclosure documents detailing their practices.
Implications for Backtesting and Strategy Development
Last look adds complexity for traders simulating FX strategies. Fill and rejection rates cannot be modeled solely from historical price data because acceptance depends on factors invisible in tick history.
The Modeling Challenge
Accepted trades tend to exhibit systematically worse realized performance once adverse selection effects are accounted for. This means backtests assuming all fills at quoted prices will overestimate strategy profitability.
Sophisticated participants address this by:
- Using provider-specific rejection data where available
- Applying conservative fill assumptions during volatile periods
- Testing strategies across both last look and no last look venues
- Incorporating slippage estimates based on actual execution data
Data Considerations
Quality historical data becomes essential for realistic strategy development. Tick-level data with millisecond timestamps allows more accurate simulation of how orders would interact with last look windows under various market conditions. A robust liquidity data feed is the foundation of this analysis.
How Brokers Should Evaluate Execution Models
For brokers selecting liquidity partners and execution infrastructure, several factors deserve attention:
Client Base and Trading Profiles
Different client segments have different priorities:
- Retail traders may prioritize price stability and competitive spreads
- Professional clients often accept some rejections for tighter pricing
- Institutional flows demand predictability and documented fairness
The right execution model aligns with your specific client mix. For many new brokers, starting with a white label forex broker solution can provide the flexibility to test different approaches.
Provider Transparency
Evaluate liquidity providers based on:
- Documented last look policies
- Historical rejection rates across market conditions
- AHT distributions and maximum thresholds
- Symmetry of application
Providers unwilling to share this information warrant skepticism.
Infrastructure Capabilities
Modern liquidity aggregation technology enables brokers to:
- Connect with providers offering different execution models
- Route orders intelligently based on client preferences
- Monitor execution quality in real time
- Configure execution policies at client or order level
This flexibility represents an evolution from earlier market structures where brokers committed to single execution approaches. Advanced MT5 API integrations are central to building this kind of agile infrastructure.
Beyond Last Look
Remember that execution quality depends on multiple factors:
- Aggregated liquidity depth
- Smart routing logic
- Low-latency connectivity
- Real-time monitoring
- Risk management systems
Last look matters, but it’s one variable among many. For a complete picture, review our comprehensive brokerage technology solutions guide.
Frequently Asked Questions
Is last look allowed in Forex trading?
Yes, last look is permitted when clearly disclosed and consistently applied. Regulatory bodies emphasize transparency rather than banning the practice outright. Problems arise only when application becomes opaque or asymmetric. The choice of forex brokerage licenses can influence the regulatory expectations around such practices.
Does last look cause slippage?
Last look itself doesn’t directly cause slippage, but it can lead to rejected trades or requotes during fast markets. Slippage occurs when prices move between order submission and execution, regardless of execution model.
Is no last look always better for traders?
Not necessarily. No last look guarantees execution certainty but typically involves wider spreads. The better choice depends on your strategy, time horizon, and sensitivity to both rejection risk and transaction costs.
Can brokers avoid last look entirely?
Yes, brokers can choose no last look liquidity models. However, providers compensate for increased counterparty risk by widening spreads, limiting order sizes, or tightening execution conditions. Brokers must weigh price certainty against overall execution efficiency.
How can I monitor last look impact?
Track metrics including:
- Rejection rates across market conditions
- Fill ratios by time of day and volatility levels
- Execution speed comparisons
- Price improvement statistics
- Slippage distributions
Reviewing these across different providers and market conditions reveals patterns tied to last look application.
What’s a typical last look hold time?
On major FX platforms today, average hold times run approximately 10 milliseconds. Maximum thresholds vary by venue, typically ranging from 10 to 200 milliseconds depending on platform rules and provider preferences.
Conclusion
Last look and no last look execution represent structural tradeoffs, not good-versus-bad models. Each approach distributes risk, pricing, and transparency differently between market participants.
For traders, understanding these mechanics enables more realistic strategy development and more informed provider selection. For brokers, evaluating execution holistically, across liquidity sources, routing logic, and performance metrics, supports better client outcomes and sustainable operations. If you’re ready to build or upgrade your brokerage, our team can help you navigate these complex decisions. Contact us for a consultation.
The key insight: execution quality depends on consistency and disclosure, not just fill mechanics. A well-disclosed last look environment can serve clients better than an opaque no last look setup. And the best trading infrastructure accommodates multiple models based on client needs and market conditions.
As industry trends continue tightening windows and improving transparency, the gap between these approaches narrows. What remains constant is the need for participants to understand exactly how their trades execute, and to choose partners committed to fair, predictable, and well-documented practices.
Ready to evaluate your execution infrastructure? Focus on transparency, consistency, and alignment with your specific trading strategies, not just whether last look exists.