Firm liquidity venues on the other hand operate an open central limit order book where trades are matched without optionality.
Last look's quote-driven behaviour is commonly argued to be necessary to protect the liquidity providers in a fragmented and unregulated market place where there is no central exchange.
The last look model has been the subject of several recent investigations and fines for misconduct over abuses of the practice and lack of transparency.
In response, the FX industry has moved towards adopting a global code of conduct.
[4] Both industry comment[5][6] and the FEMR review final report[7] describe the use of transaction cost analysis (TCA) as a method by which buy side traders can assess quality of execution from all liquidity providers and determine if they are at a disadvantage from last look.