What is Netting?

WHAT IS NETTING ? Netting is a process by which exposure or obligation is reduced by combining two or more positions. The value of multiple positions is analyzed and offset, and eventually, the parties that need to be paid and pay are determined. ΤΥPES OF NETING There are several types of netting or ways in which the concept of netting can be used. Below, we examine the four types of netting: CLOSE-OUT NETTING Close-out netting typically occurs in the event of a default. In such a situation, any existing transactions are terminated, and the values of the transactions are calculated. SETTLEMENT NETTING Novation netting cancels or nullifies an existing obligation and replaces it with a new one. If two parties owe certain amounts to each other and the transactions come with the same settlement date MULTILATERAL NETTING Bilateral netting is when there are two parties involved. If there are more than two parties, it is known as multilateral netting. wwW.FUNDS-MONEY.COM