A give up contract is an agreement where one broker executes a transaction on behalf of a client who is primarily represented by another broker. In this arrangement, the client instructs their original broker to transfer their account or specific transactions to the second broker. The accepting broker then collects a fee from the original broker for utilizing their services and facilities.
This term is commonly used in the financial and securities industries. It is relevant in scenarios involving brokerage services, investment management, and client account transfers. Users may encounter give up contracts when switching brokers or when multiple brokers collaborate on a transaction. Understanding this term can help clients navigate their options when managing investments, and they may find templates for such agreements on platforms like US Legal Forms.
Here are a couple of examples of abatement:
Example 1: A client wishes to transfer their trading account from Broker A to Broker B. Broker A executes the trades as instructed by the client, while Broker B receives a fee for managing the account.
Example 2: A hedge fund client wants to execute a large order through Broker C, but their primary broker is Broker D. Broker D gives up the contract to Broker C, allowing the latter to execute the trade while compensating Broker D for the service. (hypothetical example)
| Term | Definition | Key Differences |
|---|---|---|
| Give Up Contract | An agreement for one broker to execute trades for a client of another broker. | Involves two brokers and a fee structure. |
| Brokerage Agreement | A contract between a client and a broker outlining the terms of service. | Typically involves only one broker and does not include fee-sharing arrangements. |
| Trade Execution Agreement | An agreement detailing how trades will be executed on behalf of a client. | Focuses on execution rather than account transfer between brokers. |
If you are considering transferring your brokerage account or executing trades through a different broker, it's important to understand the implications of a give up contract. Here are steps you can take:
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| Attribute | Details |
|---|---|
| Typical Fees | Fees vary by broker and agreement terms. |
| Jurisdiction | Applicable in financial markets across the U.S. |
| Complexity | Can vary based on the number of brokers involved. |
A give up contract is an agreement where one broker executes trades on behalf of a client represented by another broker.