Bilateral netting

Bilateral netting,

Definition of Bilateral netting:

  1. See netting.

  2. Bilateral netting is the process of consolidating all swap agreements between two parties into one single, or master, agreement. As a result, instead of each swap agreement leading to a stream of individual payments by either party, all of the swaps are netted together so that only one net payment stream is made to one party based on the flows of the combined swaps.

  3. The term bilateral itself means "having or relating to two sides; affecting both sides." Net or netting refers to finding the difference between all the swap payments, producing one (net) total.

How to use Bilateral netting in a sentence?

  1. In the event of a bankruptcy, bilateral netting assures that the bankrupt company can't only take payments while opting not to payout on out-of-the-money swaps.
  2. Bilateral netting is when two parties combine all their swaps into one master swap, creating one net payment, instead of many, between the parties.
  3. Bilateral netting reduces accounting activity, complexity, and fees associated with more trades and payments.

Meaning of Bilateral netting & Bilateral netting Definition