A give-up occurs when a futures market participant uses one broker to execute a trade and another to clear it, thus requiring the executing broker to âgive upâ the trade to the clearing broker. It is estimated that more than 15,000 such agreements are executed annually involving nearly all futures commission merchants that handle customer business.
âFIA EGUS will significantly reduce the cost and the time it takes to establish give-up agreements for both customers and brokers,â said FIA Chairman Richard Berliand, managing director, futures and options for JPMorgan. âThe feedback from both the industry and the customers has been extremely positive.â
Fifteen firms have agreed to be âsupporting FCMs,â pledging to fund and use the system: Banc of America Securities, Barclays Capital, Bear Stearns, Calyon Financial, Citigroup, Credit Suisse, Deutsche Bank, Fimat Group, Goldman Sachs, JPMorgan, Lehman Brothers, Man Financial, Merrill Lynch, Morgan Stanley and UBS.
Markitâs trade processing platform will automate the give-up process, enabling brokers to track agreements, rate changes and payments more efficiently. An important benefit will be the use of electronic signatures instead of paper-based signatures; this will improve the processing of give-ups and reduce execution costs significantly. Data will be delivered electronically to exchanges, clearing houses and customer systems, thereby streamlining execution brokerage practices. The platform will be open to all executing and clearing brokers regardless of FIA membership.
The FIA developed the âuniform brokerage execution services (give-up) agreementâ in 1995. Although paper agreements will continue to be used, the new system will provide a faster and more secure way of putting the agreements in place and managing changes in the agreements.