Give-Ups And Allocating Fills

A "give-up" is an arrangement where a trader executes a trade at one broker-dealer but instructs that the resulting position be booked, cleared, and settled at a different firm — typically the fund's prime broker. The executing broker "gives up" the trade to the clearing broker, who takes on the actual custody and financing relationship with the client. This lets a fund route orders to whichever broker offers the best execution venue or algorithm for a given trade, while still consolidating all its positions and financing at a single prime broker for margin and reporting purposes.

Allocation is the related problem of splitting one aggregated execution across multiple accounts. If a manager buys 100,000 shares in one block order that actually represents three separate client accounts, the fill must be divided among them — usually pro rata to each account's intended order size, at the same average execution price, so no single account is favored with better fills than another. Regulators require this allocation to be decided and documented before the order is placed, not chosen afterward once the fill prices are known, which would let a manager cherry-pick better fills for favored accounts.