Barclay’s FX business’ woes have continued
with a US-based fund bringing a class action lawsuit against the bank over its
use of last look.
The bank was fined
$150 million earlier this month over its use of the controversial practice.
In its lawsuit, Axiom Investment Advisors
claims it, and other firms were “unfairly
deceived” by Barclays’ use of last look, which enabled it to reject trades
favourable to the customer, on grounds of latency.
Axiom, a New
York-based currency manager, claims to have evidence that it often received a
worse price than that at which it tried to execute the trade, according to a report
In a settlement with
the New York Department of Financial Services earlier this month, Barclays was
accused of not distinguishing toxic flow from instances when the market
naturally moved in the client’s direction.
“Instead of employing Last
Look as a purely defensive measure, Barclays instead used it as a general
filter to reject customer orders that Barclays predicted, based on price
movements during the hold period, would be unprofitable to the bank,” DFS
stated in its release announcing the settlement.
Colin_lambert@profit-loss.com Twitter @lamboPnL