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Time to execute give-up agreement dramatically reduced

The Futures Industry Association and Markit today announced that their global electronic give-up agreement system (EGUS) has achieved key operational efficiency milestones since its launch in February 2007. Further efficiencies are expected when the second phase of the project is released in November 2007.

In just six months, EGUS has cut the average time it takes to execute give-up agreements from 39 days to just two days. Recently, a give-up agreement was fully executed in 45 minutes – unheard of before EGUS.

Forty-five executing and clearing brokers, and 85 customer/traders, representing more than 235 entities, are now active on EGUS. They have executed a total of 1,500 agreements through the platform since its launch.

EGUS is an electronic platform that allows executing brokers, clearing brokers and their customers to create, amend, review and execute give-up agreements online. A give-up agreement occurs when a futures market participant uses one broker to execute a trade and another to clear it, thus requiring the executing broker to “give up” the trade to the clearing broker. The electronic platform is provided by Markit.

The second phase of the project, to be released in November, focuses on delivering data electronically to institutions’ back offices and exchanges’ payment systems. This will further automate the give-up process, eliminate duplicate entries in counterparties’ systems and make billing more efficient.

FIA Chairman Richard Berliand, Managing Director, Futures & Options for JPMorgan said: “We are delighted with the remarkable progress that EGUS has made in its first few months of operation. The platform has dramatically reduced the time it takes to execute give-up agreements and has brought greater operational efficiency to the futures and options markets as well as significant cost savings.”

Jeff Gooch, Head of Trade Processing and Valuations at Markit, commented: “This is an exciting initiative for Markit and one which has yielded spectacular results in a short space of time. By streamlining the give-up execution process through the use of technology, we have been able to improve trading relationships in the futures and options marketplace and have automated a once paper-intensive process.”