Close-out netting: Difference between revisions

''Be careful to distinguish between '''[[Settlement netting]]''' (also known as '''[[Payment netting]]''') - which is an operational convenience gladly applied during the life of a derivatives trading relationship, and [[Close-out netting]] which is applied, with a heavy heart, by a non-defaulting party under Section {{isdaprov|6}} of the {{isdama}} when things have turned to custard.''

=== Introduction ===

[[Close-out netting]] is the process of doing that under a [[master agreement]] such as the {{isdama}} when one party defaults. Because an {{isdama}} may have many {{isdaprov|Transaction}}s under it, some with positive and some with negative [[mark-to-market]] exposures, the ability to “net down” all these exposures to a single net sum is important when calculating risk weighting.  

*{{isdaprov|Early Termination}} under the {{isdama}}

*[[GMSLA Netting]] under the {{gmsla}}

{{ref}}