Futures Industry Association Give Up Agreement

The Commission sought opinions on all aspects of the proposal and also sought opinions on specific issues on whether and how the proposed regime, if adopted, would advance the legal and regulatory objectives described above; (2) could have an impact on aspects of market quality and liquidity; and (3) should be tailor-made. In total, the Commission received opinions on the proposal from 20 different opinions: 13 public interest and industry groups; two global banks with affiliated swaps; two global market makers; a global asset manager; an FSS operator; and a third-party provider of derivatives processing services. [4] In addition, Commission staff participated in several ex-parte meetings of the proposal. [5] The Commission also consulted Member States. Securities and Exchange Commission and foreign regulatory authorities on the proposed rule. The FIA Law and Compliance Division regularly publishes and updates standard agreements governing the eventual icing process. FIA Tech, meanwhile, manages Accelerate DocsTM (former give-up electronics system (EGUS)) which allows brokers, traders and clients to execute standard give up agreements electronically. Companies can use the model agreements either manually on paper or electronically in Accelerate DocsTM. The standard Trader and Customer Give-Up agreements are available for download here. On May 21, 2007, OSE implemented the Give-Up system to improve the comfort of futures and options trading by reducing margin requirements and office expenses for settlement-related transactions. The Commission does not consider that the destruction of the name is necessary or appropriate after trading to correct anonymous swap errors before trading and swaps to be clarified. A SEF can, if necessary, facilitate corrections between communications and other errors, without disclosing the identity of the counterparty.

[102] Accordingly, the Commission refuses to adopt a derogation from the prohibition on the destruction of names after trading for corrections to the trade in errors. Therefore, any SEF offering swap exchanges subject to the prohibition must ensure that its rules and procedures relating to error transactions allow errors to be corrected without the identity of the counterparties being disclosed between them. The Commission has decided not to adopt this alternative. The Commission agrees with these observations, which argue that the name is not necessary for post-trade review meetings and that post-trade anonymity does not make review meetings more difficult or costly and may offer the benefits of increased participation. The reasons given by JPMorgan and FSF for why they consider the application of the name after trading to be an important aspect of review meetings are essentially the same reasons as the alleged benefits of applying the name after trading in general, i.e. preventing an adverse choice and ensuring reliable coverage for established swap traders. Section 5h(e) of the CEA sets the legal objective of the SEF regulatory system to promote swap trading on SEFs and to promote price transparency prior to trading in the swap market. [8] In the proposal, the Commission considered that, despite the liquidity available for cleared products on certain DEF platforms, the scope and number of active participants could be limited due to market participants` concerns about information leakage and anti-competitive behaviour made possible by post-trade names. [9] The Commission also stated that a completely anonymous trade (i.e. without name destruction after trade) would probably encourage more participants to act on these platforms. [10] The proposal sought public views on the impact of the prohibition of post-trade non-registration on trade and pre-trade price transparency of the SEF concerned. After considering public comments on the proposal, the Commission adopts the proposed regulations, considering some of the amendments and clarifications below.

In particular, the Commission amends its regulations, in part 37, to prohibit post-trade naming for swaps that have been exported, arranged in advance or traded anonymously in accordance with the rules of a SEF and which must be approved. . . .