  We examine the Foreign Exchange (FX) spot price spreads with and without Last
Look on the transaction. We assume that brokers are risk-neutral and they quote
spreads so that losses to latency arbitrageurs (LAs) are recovered from other
traders in the FX market. These losses are reduced if the broker can reject,
ex-post, loss-making trades by enforcing the Last Look option which is a
feature of some trading venues in FX markets. For a given rejection threshold
the risk-neutral broker quotes a spread to the market so that her expected
profits are zero. When there is only one venue, we find that the Last Look
option reduces quoted spreads. If there are two venues we show that the market
reaches an equilibrium where traders have no incentive to migrate. The
equilibrium can be reached with both venues coexisting, or with only one venue
surviving. Moreover, when one venue enforces Last Look and the other one does
not, counterintuitively, it may be the case that the Last Look venue quotes
larger spreads.
