Settlement netting: Difference between revisions
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===Caution=== | ===Caution=== | ||
Settlement netting should not be, but routinely is, confused with the much more drastic close-out | Settlement {{tag|netting}} should not be, but routinely is, confused with the much more drastic [[close-out netting]], which is the termination of all extant transactions and the calculation of a single net {{isdaprov|Early Termination Amount}} under section {{isdaprov|6(e)}} of the {{isdama}}, which is something that only happens in the unhappy situation that one or other party has terminated following an {{isdaprov|Event of Default}} under Section {{isdaprov|5(a)}} or a {{isdaprov|Termination Event}} under Section {{isdaprov|5(b)}}. | ||
{{isdaanatomy}} | {{isdaanatomy}} | ||
Revision as of 12:22, 16 July 2013
In the context of an ISDA Master Agreement is the ability, vouchsaved in Section 2(c) of the ISDA Master Agreement, to offset cashflows due between parties to the agreement on the same day in the same currency but in respect of different Transactions.
Caution
Settlement netting should not be, but routinely is, confused with the much more drastic close-out netting, which is the termination of all extant transactions and the calculation of a single net Early Termination Amount under section 6(e) of the ISDA Master Agreement, which is something that only happens in the unhappy situation that one or other party has terminated following an Event of Default under Section 5(a) or a Termination Event under Section 5(b).