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Give Up

A procedure in securities or commodities trading where the executing broker places a trade on behalf of another broker as if he/she actually executed the trade. This is usually done because a broker is too busy to place a trade for a client and asks another broker to place the trade for him/her. On the record books, the trade will not show the executing broker's information, but the broker to whom the client belongs. Thus, the broker of the client and the broker on the other side of the trade will receive the commission, while the executing trader will get nothing. This is a grey area of law governing reimbursement of brokers for services (e.g. research).

Notes:

Pay close attention, here's how it works. Broker X gets a buy order from a client but is too busy to place the trade, so he asks Floor Broker Y, who isn't as busy, to place the order for him/her. Broker Y then buys the stock from Broker Z on behalf of Broker X's client. However, although Floor Broker Y places the trade, he must "give up" the transaction and record it as if Broker X placed the trade since the client belongs to him/her. Thus, the transaction is recorded as if X & Z made the trade, even though Floor Broker Y executed the trade.

See also: Agent, Broker-Dealer, Dealer, Discount Broker, Front Running, Full Service Broker, Step-out Trading, Two Dollar Broker

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Give up

Used for listed equity securities. (1) Term used in a securities transaction involving three brokers, as follows: Broker A, a floor broker, executes a buy order for broker B (a member firm broker who has too much business at the time to execute the order). The broker with whom broker A completes the transaction (the sell-side broker) is broker C. Broker A "gives up" the name of broker B, so that the record shows a transaction between broker B and broker C even though the trade is actually executed between broker A and broker C; (2) distribution of commissions to brokerage houses not participating in a trade. This is a grey area of the law governing reimbursement of a broker for services (e.g., research). See: Directed brokerage.