Assumption of ObligationNetting

Netting

  • Netting is the function by which the calculated difference between selling and buying volume, as well as that of corresponding payment amount between two parties are transferred to complete settlement as if by offsetting mutual obligation opposing with each other.
  • In the case where a clearing house is not available as the central counterparty (CCP), the effect of netting is limited as shown in the Example 1. (In the case of Example 1, only the transactions (1) and (2) between Securities Company A and Securities Company B can be offset upon settlement.)
<Example 1> Netting without a clearing house as CCP
Netting without a clearing organization as CCP
  • On the other hand, in the case where a clearing house is available as the central counterparty (CCP), the settlement counterparty to each trade is unified under the clearing house as shown in Example 2. Under this arrangement, the more efficient netting is achieved since the net balance of the selling and buying volume is calculated and then settled between each party concerned and the clearing house (CCP).
<Example 2> Netting with a clearing house as the central counterparty (CCP)
Netting using a clearing organization as the central counterparty (CCP)