# Give-Up Trades: Definition, Key Parties, and Practical Examples

## What Is Give-Up?

A give-up trade involves multiple brokers: the executing broker conducting the transaction, the client’s broker who oversees the trade, and the broker on the opposite side. This agreement was more common before electronic trading became prevalent, as brokers relied on others to act on their behalf under challenging circumstances.

### Key Takeaways

*   A give-up trade involves an executing broker placing a trade on behalf of another broker, giving up credit for the transaction.  
    
*   The practice of give-up trades was more common before electronic trading, and it relies on prearranged agreements for execution and compensation.  
    
*   Acceptance of a give-up trade is sometimes called a give-in, though this terminology is less frequently used.  
    
*   Give-up trades typically involve three parties: the executing broker, the client's broker, and the broker on the opposite side.  
    
*   Nowadays, execution through give-up trades occurs electronically, reducing the need for physical broker involvement.

## Navigating the Mechanics of Give-Up Trades

Give-up is no longer a common trading practice in the financial markets. Give-up was more common before the development of electronic trading. During floor trading days, if a broker couldn't reach the trading floor, they used another broker as a [proxy](https://www.investopedia.com/terms/p/proxy.asp). Usually, executing a trade for another broker is part of a prearranged give-up agreement. Prearranged agreements typically include provisions for the give-up trade procedures as well as compensation. Give-up trades aren't standard, so payment terms require a prearranged agreement.

## Differentiating Give-Up and Give-in in Trading

Acceptance of a give-up trade is sometimes called a give-in. After a give-up trade is actually executed, it can then be called a give-in. However, the use of the term "give in" is much less common.

## Key Players in a Give-Up Trade

There are three main parties involved in a give-up trade. These parties include the executing broker (Party A), the client's broker (Party B), and the broker taking the opposite side of the trade (Party C). A standard trade only involves two parties, the buying broker and the selling broker. A give-up also requires one other person who executes the trade (Party A).

If the original buying and selling brokers are busy, a fourth party might get involved in a give-up trade. If both brokers request other traders to act for them, it results in give-ups on both sides.

A request is made of Party A to place the trade on behalf of Party B to ensure the timely execution of a trade. In the trade log, a give-up trade records information for the client's broker (Party B). Party A executes the transaction on behalf of Party B and is not formally noted in the trade record.

Compensation agreements are typically created to manage the provisions of give-up trades. The executing broker (Party A) may or may not receive the standard trade spread. Non-floor brokers often pay executing brokers with a retainer or per-trade [commission](https://www.investopedia.com/terms/c/commission.asp). This payment might be included in the commission Broker B charges their client.

## Illustrating Give-Up Trade With an Example

Broker B gets a buy order from a client to buy 100 shares of XYZ on the [New York Stock Exchange](https://www.investopedia.com/terms/n/nyse.asp) (NYSE). Broker B works upstairs at a large brokerage firm and needs to get the order down to the floor of the NYSE. To execute the trade in a timely fashion, Broker B asks Floor Broker A to place the order. Floor Broker A then buys the stock on behalf of the client of Broker B.

Although Floor Broker A places the trade, he must give up the transaction and record it as if Broker B made the trade. The transaction is recorded as if Broker B made the trade, even though Floor Broker A executed the trade.

## What Is a Give-Up in Prime Brokerage?

[Prime brokerages](https://www.investopedia.com/terms/p/primebrokerage.asp) are a bundled group of services that certain banks offer to large clients like institutional investors and hedge funds. Those clients will use their prime brokerage to execute their trades. In a way, they outsource the trading so they can focus on their own investment strategy. Those prime brokerages will then themselves engage in give-up trades for their client: the fund or institutional investor.

## What Does Trading Away Mean?

Trading away means executing a trade through another broker or dealer. One of the benefits of trading away is that the trader is able to place trades with multiple brokers but from one centralized account. This can be useful when one broker, usually the main broker, does not have access to certain markets or instruments.

## What Is a Master Give-Up Agreement?

A Master Give-up agreement is an agreement entered into by two parties that facilitates authorized transactions between customers and dealer banks authorized in the agreement. The agreement will also come with a compensation agreement, which is meant to cover potential losses in the event the prime broker does not accept the give-up transaction.

## What Is an AGU Agreement?

An AGU agreement stands for "Automatic Give-Up," and is an agreement that automatically locks in a transaction in the system where the transaction is logged. These agreements, like give-up agreements, are required by parties to be reported to the [Financial Industry Regulatory Authority](https://www.investopedia.com/terms/f/finra.asp) (FINRA).

## How Do Give-Up Trades Work?

Give-up trades work when one party is unable to place the trade, so they entrust the trade to a third party. If John wants to buy ABC stock but is unable to place the trade with Andy, who owns the stock, John may have Mary make the trade for him, delivering the stock from Andy to John after John has paid. There can be four total parties if in this example Andy is also unable to make the trade personally. Nowadays, this is done electronically.

## The Bottom Line

Give-up trades involve an executing broker placing trades on behalf of another broker, often due to logistical constraints. While this practice was widespread before the advent of electronic trading, it has significantly decreased with technological advancements in the financial markets. In a give-up trade, the executing broker "gives up" credit for the transaction in the record books, highlighting the importance of prearranged agreements between brokers for trade execution and compensation. Understanding this process can offer insights into historical and current trading practices, emphasizing the critical role technology plays in modern financial transactions.

> **Article Sources**
>
> 1.  U.S. Securities and Exchange Commission. "[FX Prime Brokerage Agreement](https://www.sec.gov/Archives/edgar/data/1474307/000119312509220572/dex105.htm)."
>     
> 2.  Financial Markets Lawyers Group. "[FX Master Give-Up Agreement](https://www.newyorkfed.org/fmlg/documentation/giveup.html)."
>     
> 3.  Financial Industry Regulatory Authority. "[Trade Reporting Frequently Asked Questions](https://www.finra.org/filing-reporting/market-transparency-reporting/trade-reporting-faq#200)."