Settlement netting

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).