netting by novation definition
netting by novation means a netting arrangement between the parties to a series of transactions where an account of amounts due is kept and the rights and obligations of the parties in respect of the account are continuously extinguished and replaced by a new single amount payable by one party to the other;
netting by novation means a netting arrangement between the parties to a series of transactions where an account of
netting by novation provides a means of reducing counterparty credit risk by effecting a discharge of each individual foreign exchange contract, or other obligation, as it is netted. (This can also be referred to as “obligation netting”.) Two banks can enter into a formal agreement under which one running net amount will be due between them for each future value date in each currency they trade. This is achieved by netting the second, and each subsequent, deal with the first for that particular date and currency, and thereby effecting a new (novated) contract for the net amounts. This