Introduction:

The Financial Industry Regulatory Authority (FINRA) is a self-regulatory organization responsible for the oversight and regulation of brokerage firms and financial professionals in the United States. FINRA has developed a mechanism for resolving disputes between parties called the FINRA Give-Up Agreement.

What is the FINRA Give-Up Agreement?

The FINRA Give-Up Agreement is a legally binding agreement that is used when a party to a trade wishes to transfer its rights and obligations to another broker-dealer. This is commonly referred to as a “give-up” trade. The give-up agreement is used when a firm wishes to allocate its trades to other member firms for settlement purposes. The agreement identifies the terms and conditions of the transaction, including the commission rate to be paid to the executing broker, the settlement date and the parties involved in the transaction.

Why is the FINRA Give-Up Agreement important?

The give-up agreement is an important tool for financial firms to ensure that their trades are settled in a timely and efficient manner. It streamlines the process of allocating trades, reducing the need for additional paperwork and reducing the risk of errors. The agreement also outlines the roles and responsibilities of the parties involved in the transaction, reducing the potential for disagreements and disputes.

The FINRA Give-Up Agreement and Compliance

FINRA requires its members to comply with certain rules when using the give-up agreement. For example, firms must have written procedures in place for allocating trades to other firms. Firms must also ensure that the executing broker on the trade is properly identified in all documents related to the transaction.

Conclusion:

The FINRA Give-Up Agreement is an important tool for financial firms to ensure that their trades are settled in a timely and efficient manner. The agreement helps to streamline the process of allocating trades, reducing the need for additional paperwork and reducing the risk of errors. Financial firms must comply with certain rules when using the give-up agreement, including having written procedures in place for allocating trades and ensuring that the executing broker is properly identified in all documents related to the transaction.