Bilateral netting
5 definitions

Bilateral netting

An agreement between two counterparties to offset the value of all in-the-money contracts with all out-of-the-money contracts, resulting in a single net exposure amount that one counterparty owes to the other.

Bilateral netting

An arrangement whereby two parties net their bilateral obligations.

Bilateral netting

Consolidating cash flows from two different contracts or instruments.

Bilateral netting
"Bilateral netting": An arrangement between two parties to net their bilateral obligations. The obligations covered by the arrangement may arise from financial contracts, transfers or both. For example purchases between two subsidiaries of the same company may be netted against each other so that over time, typically one month, only the net difference is transferred.
Bilateral netting

An arrangement between two parties (which could be entities within the same group or third party organisations, but more frequently the former) to offset transactions between the parties and settle only the difference between them, either on a net or gross basis. This reduces the number of physical transfers that take place and therefore transaction costs. Bilateral netting cycles are typically run on monthly or another regular cycle.

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About this term

Bilateral netting has been defined 5 different ways in documents like Energy, Utilities & Mining Glossary, ECB Glossary, Custody Services: Comptroller's Handbook, and 2 more.

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