How Does a CCP’s Netting Process Improve Market Efficiency?
Netting consolidates multiple transactions between a clearing member and the CCP into a single net payment obligation. Instead of settling every individual trade, only the net difference is exchanged.
This dramatically reduces the number of payments, minimizing settlement risk, operational costs, and the overall liquidity needed to manage positions.
Glossar
Netting
Calculation ⎊ This is the mathematical process of offsetting mutual obligations between two counterparties across a portfolio of derivative contracts to determine a single net liability or asset position.
Netting Process
Mitigation ⎊ Netting processes, within cryptocurrency, options trading, and financial derivatives, represent a risk reduction technique applied to counterparty credit exposure.