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   Netting by Novation
   















 

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Netting by Novation

Replacement of all agreements between two parties with a single agreement and a single net payment stream. Formal netting by novation is often a response to financial distress on the part of one counterparty. Also called by various other names, most including the word 'netting.' See also Bilateral Netting, Novation.

For a further discussion of the various types of netting, see "Key Risk Concepts: Netting & Insolvency"

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