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What Is Multilateral Netting, and Why Is It Superior to Bilateral Netting?

Multilateral netting, via a CCP, consolidates trades across many parties, achieving greater efficiency than bilateral netting between just two.
Greeks.Live22.11.25

What Is Multilateral Netting, and Why Is It Superior to Bilateral Netting?

Bilateral netting consolidates trades between only two parties. Multilateral netting, facilitated by a CCP, consolidates trades among all clearing members.

This process is superior because it significantly reduces the total number of transactions and the aggregate value of outstanding obligations across the entire market, leading to much greater capital and operational efficiencies.

What Is the Difference between a Bilateral Trade and a Cleared Trade in Derivatives?
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Could a Network of Interconnected State Channels (E.g. Lightning Network) Support a Multilateral Derivatives Market?
How Does ‘Novation’ Change the Legal Relationship between Trading Parties in a CCP Environment?

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