Last look exists because electronic quotes are streamed to many clients at once and can be stale by the time an order arrives. The provider takes a brief hold period, often a few milliseconds, then accepts or rejects.
Critics point out the option is one-sided: rejections cluster when the market has moved in the client's favour. Regulators and the industry code have pushed for shorter hold times and public disclosure of rejection rates, but the practice remains standard in much of FX.
Example: a provider holds orders for 25 milliseconds and rejects 3% of them. The rejected trades show an average post-rejection move of 0.4 pips against the client, an implicit cost that never appears on a statement.
Related: requote, liquidity-provider, best-execution, latency-arbitrage