Glossary · Settlement
Net Settlement
Also: netting, settlement netting
Published
Net Settlement — Net settlement is the practice of combining multiple trades between two parties over a period into a single net obligation per asset, so that only the difference moves rather than the gross value of every trade. It reduces the value at risk during settlement, the number of transfers, and the associated fees.
Gross Versus Net
Under gross settlement every trade moves in full. A desk that buys 100 units in the morning and sells 90 in the afternoon moves 190 units across two transfers. Under net settlement the same activity produces a single transfer of 10 units at the settlement cutoff. The counterparty exposure during the day is the net position rather than the gross flow.
How It Is Agreed
Netting requires documented terms between the parties: which assets and currencies net, at what cutoff, how the net amount is confirmed, and what happens if one party disputes the figure. Settlement networks that support netting reconcile positions continuously so that both sides see the same net obligation before it moves.
Why It Matters
For treasuries and desks with two-way flow, netting cuts on-chain transfers, fees, and the operational work of reconciling many movements, and it shrinks the principal exposed at settlement. Combined with stablecoin rails and delivery-versus-payment sequencing, it brings digital asset settlement close to the risk profile institutions expect from traditional post-trade infrastructure.