There are three main parties that participate in a give up trade. These parties include the executive broker (Part A), the client`s broker (Part B) and the broker who takes the opposite side of the trade (Part C). A standard trade consists of only two parts, the buying broker and the selling broker. Abandonment also requires another person who carries out the trade (Part A). The ETD-Give-up is the only one to act as a real exchange between the client and the executive broker, then a novation of this trading from the client to the clearing broker, where a back-to-back transaction between the clearing broker and the client comes to life. Indemnification agreements are usually established to manage the provisions of give-up trades. The executive broker (Part A) may or may not obtain the standard trading price. Executive brokers are often paid by non-floating brokers either on retainer or with a commission per trade. This full payment to the executive broker may be part of the commission that Broker B charges to his client. Giving up is no longer a common business practice in financial markets. Giving up was more common before the development of e-commerce. In the age of parquet trading, one broker may not be able to put it on the floor, and another broker would place trading as a kind of proxy. Overall, conducting a trade on behalf of another broker is usually part of a waiver agreement agreed upon in advance.
Agreements concluded in advance usually contain provisions on OTC exchange procedures as well as compensation. Give-up trades are not standard practices, so payment is not clearly defined without prior agreement. Documented under the FIA`s standard Giveup documentation, which is available free of charge worldwide, here. There is a client version and a commercial version of the electronic give up system (EGUS). . . .