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'''Never''' surrender. | '''Never''' surrender. | ||
A give up is in practical theory an arrangement whereby a pending trade between a hedge fund and an executing broker is "given up" by the hedge fund to its prime broker, who | A give up is in practical theory an arrangement whereby a pending trade between a hedge fund and an [[executing broker]] - be it a [[derivative]] or for a [[cash trade]] - is "given up" by the hedge fund to its [[prime broker]], who accepts the fund's contract with the executing broker on condition that it can put on an economically identical off-setting transaction with the hedge fund. | ||
It sounds, you might think, like some kind of novation. But oh, no. That would be far too sensible. | It sounds, you might think, like some kind of novation. But oh, no. That would be far too sensible. | ||
There are | There are three normal ways of giving up, and ironically neither of them involve any contract which is given up. | ||
*'''ISDA Give Up''': under the [[2005 ISDA Master Give-Up Agreement]], derivatives traded under an {{isdama}} may be given up to a {{tag|Prime | *'''ISDA Give Up''': under the [[2005 ISDA Master Give-Up Agreement]], derivatives traded under an {{isdama}} may be given up to a {{tag|Prime broker}}. Under this arrangement the hedge fund acts at all times as the prime broker's [[agent]] (it may not be a client of the {{tag|executing broker}} at all) and never creates its own contract with the executuing broker - it simply arranges the contract between the {{tag|executing broker}} and the prime broker. The [[PB]] then puts on a back-to-back trade with the [[HF]] under the ISDA between them. Net result: the PB intermediates between [[EB]] and [[HF]]. Calling this arrangement a "give-up" is something of a misnomer. | ||
*'''Equity Give Up''': Under a cash equity give-up process, the | *'''Equity Give Up''': Under a cash equity give-up process, the hedge fund seeks a ''firm price'' indication from the {{Tag|executing broker}}, but ''does not act on it'': rather, the HF takes the quote and instructs its [[prime broker]] to do so. Once the PB has traded with the EB, the PB creates a back-to-back transaction with its client, usually in the shape of an equity swap transacted under an {{isdama}}. This one is a misnomer too, amusingly enough*, since here, also, there is never a contract that is given up. | ||
*'''ETD Give Up''': Documented under the {{tag|FIA}} standard giveup documentation, available free to the world, [http://www.fia-tech.com/EGUS/Agreements/standard.asp here]. There is a [http://www.fia-tech.com/downloads/STDC-2008-final.pdf Customer Version] and a [http://www.fia-tech.com/downloads/STDT-2008-final-1.pdf Trade Version] of the [[Electronic Give-Up System]] ([[EGUS - CCP|EGUS]]). | *'''ETD Give Up''': Documented under the {{tag|FIA}} standard giveup documentation, available free to the world, [http://www.fia-tech.com/EGUS/Agreements/standard.asp here]. There is a [http://www.fia-tech.com/downloads/STDC-2008-final.pdf Customer Version] and a [http://www.fia-tech.com/downloads/STDT-2008-final-1.pdf Trade Version] of the [[Electronic Give-Up System]] ([[EGUS - CCP|EGUS]]). | ||
===See Also=== | ===See Also=== | ||
*[[2005 ISDA Master Give-Up Agreement]] | *[[2005 ISDA Master Give-Up Agreement]] |