ACCESSING EGUS
GIVE-UP AGREEMENTS
UPLOADING LEGACY AGREEMENTS
HOW THE SYSTEM WORKS
FEES

1. What is EGUS?
   1. EGUS is the FIA Electronic Give-Up Agreement System. It is a web-based system designed to allow executing and clearing brokers, traders and customers to execute the FIA International Uniform Give-Up Agreement electronically.

2. Do you have to be a member of FIA to participate?
   1. No. EGUS is open to all parties to give-up agreements regardless of membership in FIA.

3. Why did FIA take on this project?
   1. FIA/FOA conducted a study to determine what projects could be undertaken by the industry as a whole to improve operational efficiency. Give-ups were the most frequently mentioned area in which firms could work together to improve the process and reduce costs. Even before the study took place, FIA divisions were working on ways to reduce the inefficiencies in executing give-up agreements and improving the fee collection process. The FIA board felt that the FIA should take on the project rather than allowing a third-party vendor to develop the system so that the industry could control the design, development and costs of maintaining and running the system.

4. What is the nature of FIA’s relationship with the supplier?
   1. FIA has contracted with Markit Group to provide the web-based electronic platform for EGUS. Markit Group is a respected provider of automated solutions to the financial services industry. Markit's services include processing of over-the-counter derivatives, secure real-time communications, and compliance and counterparty management. FIA retains the intellectual property contained within the system and can move the data to another supplier if necessary. More information about Markit can be found at www.markit.com.

5. How is the system funded?
   1. The FIA board asked its FCM members to help underwrite the system for five years. We call these firms supporting FCMs. The list of supporting FCMs is available on our web site: http://www.futuresindustry.org/supporti-2750.asp. In addition, system users are subject to agreement and storage fees.

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ACCESSING EGUS

6. How does my firm get access to the system?
   1. Each “party” must sign the Adherence to the System User Agreement and return it to the FIA before being given access to the system. The Adherence Agreement requires the institution to specify a System Administrator and a Billing Contact. The Administrator and Billing Contact (for FIA invoices) can be the same person or different persons. Your system administrator can permission additional administrators at the institution level. This option is not yet available by party.

7. We are a global firm with many affiliates involved in the give-up process. Which entity/affiliate should be named as the institution?
   1. The system is organized by institutions and parties. Institutions can be a short, generic name such as Best Securities, which encompass all of your affiliates (parties). Institution names have no legal standing; it is just a way of organizing affiliates under an umbrella name. Party names should represent legal entities i.e. Best Securities, Inc., Best Securities, LLC, Best Securities Pty. All documents underneath an institution are visible to all parties. If you do not want an affiliate to see another affiliate’s documents, then the affiliate needs to be under a separate institution.

8. What if I have an affiliate that is a customer or trader and another affiliate that is a broker?
   1. The customer or trader affiliate, Best Securities Asset Management, should be listed as a separate institution. Customers and traders must permission executing and clearing brokers to see their contact information. If Best Securities Asset Management is listed as a separate institution, it must permission Best Securities Inc. and Best Securities LLC to see its contact information.

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GIVE-UP AGREEMENTS

9. What Give-Up Agreement should we now use in connection with new agreements being created?
   1. While each firm must make its own decision, we recommend that you use the new Give-Up Agreements as listed on the FIA web site: http://www.futuresindustry.org/giveupag-2753.asp. All of these agreements have a date of December 2006 at the bottom of the first page. There are 10 such agreements listed on the FIA web site along with an explanation that describes all of the changes made to the versions created in 1995, the year that the FIA prepared the Uniform Give-Up Agreements. There are the standard “Trader Version” and “Customer Version” agreements. In addition, the web site lists two updated versions of the EFP Agreement and three sets of LME Give-Up Agreements. The LME Give-Up Agreements differ only by the names of the various parties set forth in each of the LME Give-Up Agreements.

10. Why haven’t you provided a 3-or 4-party LME Agreement?
    1. There is no need to create a special Customer or Trader LME Version if both the Executing and Clearing Brokers are LME member firms (and there are no other executing or clearing brokers involved). You can simply use the standard Customer and Trader Versions of the Give-Up Agreement. As noted above, if either or both the direct Executing or Clearing Broker is "not" an LME member firm, then the EGUS system has created special LME versions to be used for these situations.

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UPLOADING LEGACY AGREEMENTS

11. Please describe what is meant by a “Legacy Agreement.” How can Legacy Agreements be added to the EGUS System for use by all parties?
    1. Firms may choose to store legacy agreements—agreements executed prior to EGUS going live—on the system. These agreements must be converted to pdf documents for uploading. EGUS has a page where legacy documents must be uploaded—it prompts you to add the names of the parties and the effective dates of the agreement.

12. Can I upload legacy agreements without notifying the other parties to the agreement?
    1. We do not provide legal advice, but we believe that you do not need permission from your counterparties. Only the counterparties to the agreement can see an agreement.

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HOW THE SYSTEM WORKS

13. Please describe how changes can be made to the Give-Up Agreements that will be included in the EGUS System.
    1. EGUS presents each paragraph of the give-up agreement in two columns. The original text is contained in the left column. The right column gives the system user the opportunity to make changes in the language. Any change in the language appears in boldface type, so all parties to the agreement can immediately see changes. Only the party that initiates the agreement can make changes to the agreement. Other parties can comment and request changes for the initiating party to consider.

14. Who can initiate an agreement?
    1. Any party to a give-up agreement can initiate an agreement. EGUS has a feature that the system user can check if it prefers to initiate agreements. When that party is selected by another initiator, a flag will appear saying “This party prefers to initiate an agreement.” The original initiator can ignore the flag or contact that party and ask it to initiate an agreement.

15. If we elect to use only one institution and create different parties within that institution, can we establish an administrator for each party rather than for the institution?
    1. No. You can have multiple administrators for the institution, but you cannot have an administrator for each party. All administrators will have access to change information/permissioning for all parties.

16. Does the EGUS System operate on a 24/7 basis or is there any down time for the System?
    1. The system is available 24/7. When necessary, Markit conducts maintenance on weekends—close of business U.S. (Friday evening U.S.) to opening of business in Asia (Sunday evening U.S.).

17. When a new account is added, is the Clearing Broker only required to make this change or must all of the parties to that Give-Up Agreement approve this new account change?
    1. When a new account is added, all parties to the agreement will be notified. Approval is not needed unless it is an LME Agreement. LME requires that all parties to the agreement approve additional accounts. In the case of LME Agreements, all parties to the agreement must approve the addition of a new account just like they do a new agreement. This is much easier in EGUS because the initiator can simply select the previous agreement, add the new account and send it to the other parties for review and approval.

18. Can we use the Uniform Give-Up Agreements for non-U.S. equity options transactions?
    1. Yes.

19. Please describe how commission rate schedules will be displayed on the EGUS System.
    1. EGUS has two phases. The first phase makes it possible to execute give-up agreements online. The second phase makes it possible to download information contained in the give-up agreement into internal and vendor systems. In the first phase, system users must upload rate schedules in PDF format. In the second phase, EGUS will have a standard rate table which system users will complete.

20. What if I have agreements in TIF format?
    1. The system will only support PDFs. We can suggest an inexpensive program which converts TIF to PDF.

21. Will EGUS and GAINS information be available to downstream systems like GPS, Gains, Rolfe & Nolan and Sungard?
    1. We are working on a common feed that will be suitable for GPS, Gains and other proprietary systems. This is part of Phase 2 of the EGUS project.
       

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FEES

22. What fees are associated with EGUS?
    1. EGUS users must pay a per agreement fee every time an agreement is executed and a storage fee based on the number of documents a firm has stored in the system. The fees are posted on the FIA web site: http://www.futuresindustry.org/egus-2752.asp.

23. Who pays the per agreement fee?
    1. Only the executing broker pays the per agreement fee.

24. What if the executing broker is not in the system?
    1. The executing broker must be in the system to execute the agreement online; however, if an agreement is physically executed it can be stored online using the upload legacy agreement feature.

25. Does the number of documents executed include those executed by all of my affiliates?
    1. Yes.

26. Is a fee charged for loading legacy agreements?
    1. Supporting FCMs have a fee holiday until March 31 to upload legacy documents at no charge. If you are not a supporting FCM, you must pay the per agreement fee for legacy agreements. We have made executing brokers responsible for uploading legacy agreements. EXCEPTION: Goldman Sachs and Man Financial have uploaded all of their executed agreements regardless of whether they were clearing or executing broker.

27. Do customers/traders pay any fees?
    1. They are optional. Customers and traders only pay fees when they would like to use the system as their repository for agreements which we call a storage fee. If they do not choose to store documents in the system, they can print or email the agreement upon execution, but they will only have access to that document for seven (7) days after it is executed.

28. Can executing and clearing brokers elect to not pay the storage fee?
    1. No. All executing and clearing brokers are subject to the storage fee. Executing and clearing brokers (except supporting FCMs) will need access to existing agreements in order to initiate new agreements.

29. How were these fees set?
    1. The fees were designed to cover the cost of designing, developing, and operating the system and future enhancements to the system. We set 2007 fees based on the amount of agreements we felt would be executed annually after surveying 18 firms. From our survey, we estimated that the cost of executing a single give-up agreement frequently exceeded $100 per agreement when the cost of overnight mail and staff time was considered. This does not include commission revenue lost while waiting for agreements to be put in place.

30. How will fees be set in the future?
    1. The fees will be set by the FIA board of directors based on the recommendations of the EGUS Advisory Committee. The EGUS Advisory Committee consists of representatives from the supporting FCMs, customers/traders, and executing brokers who are not members of FIA.

31. Do you expect the fees to increase or decrease?
    1. The support for the system has exceeded our expectations so we hope to be able to reduce fees for 2008, but we cannot guarantee fees will be lowered at this time. We need to have several months of operating the system in order to determine if the fees are more than sufficient to fund the system. The more firms use the system, the more likely we will be able to lower the fees.

32. How often will system users be billed?
    1. FIA will bill system users quarterly.

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Draft as of June 3, 2010