The Financial Markets Lawyers Group, sponsored by the Foreign Exchange Committee of the Federal Reserve Bank of New York, has issued a „master forex-give-up“ agreement. In give-up relationships, a party named by a premium broker makes transactions with a trader, which are then passed to the first broker. The first broker then has a trade with the trader and a clearing agreement with the party. Compare this to the cash-equity give-up process, in which the prime broker`s client looks for a price indication from the execution broker, but never concludes any trading, but orders his first broker to do so against the execution of an unequivocal stock exchange between the prime broker and the client. This too is an illusion, amusing , because here too, there is never a treaty that is abandoned. This is an agency agreement in which a first broker client (called „Designated Party“) can trade on behalf of the party`s first broker as part of an ISDA executive contract. There is never a contract in principle between the besaum party and the trader. The agreement can be adapted to interest rate swaps, caps, floors, swaps, foreign exchange swaps, credit derivatives transactions, foreign exchange transactions and optional foreign exchange transactions. The agreement published yesterday attempts to standardize the process and the conditions under which the transfer takes place. The International Swaps and Derivatives Association hopes to conclude its own standardized loan-up agreement covering currencies, credit derivatives and interest rate swaps by the end of the year (DW, 12/20).
Spielman said many FMLG members representing companies such as Bear Stearns, Lehman Brothers, are also participating in the IsDA initiative. „The deal is a benefit to customers because a client can consolidate all of their fx positions with a single bank,“ said Robert Spielman, director and senior counsel at Deutsche Bank in New York, who was involved in negotiating the contract. He said it allows the customer to do without all his positions, which means a more efficient use of warranties. It also has operational advantages because the client negotiates with a single premium broker. Spielman pointed out that the agreement gives the customer access to many banks with which he did not have a line of credit without the abandonment report. Ironically, while the ISDA documentation can be said to be amusing, there is no abandonment in this agreement — there is only one contract between dealers and early brokers — so the document is a kind of forgery.