Payments and markets glossary



net credit cap
A limit placed on the credit exposure which a participant is allowed – or willing – to take on vis-à-vis all other participants or a given participant in the system as a result of sending/receiving payments which have not been settled. See also
net margining
A mechanism whereby the margin that a participant posts in a central counterparty (CCP) for its customers’ positions is the net total of the requirements for the individual customers. See also
gross margining
net settlement
The settlement of transfer orders on a net basis. See also
gross settlement
net settlement system
A funds or securities transfer system which settles net settlement positions during one or more discrete periods, usually at pre-specified times in the course of the business day. See also
gross settlement system
In the context of clearing or settlement systems, the agreed offsetting of mutual obligations by participants in a system. This process involves the calculation of net settlement positions and their legal reduction to a (bilateral or multilateral) net amount. Netting may take several legal forms. See also
bilateral netting
multilateral netting
netting by novation
position netting
netting by novation
An agreement whereby obligations derived from individual transfer orders are netted and replaced by a new obligation. The parties to the new obligation may be the same as the parties to the existing obligation. Alternatively, in the context of some clearing house arrangements, there may be some substitution of parties. Antonym:
position netting
A person or entity named by another to act on its behalf. Nominees are commonly used in securities transactions to register and obtain legal ownership of securities.
non-clearing member
A member of a regulated market that uses a general clearing member to access a clearing house’s services. All trades must be settled through a clearing member. See also
clearing member
direct clearing member
general clearing member
Mechanisms providing evidence of: 1) the identity of the sender of a payment message; and 2) the integrity of that message. These are sufficient to prevent the sender of a message from successfully denying the submission of the payment message or the integrity of its contents.
nostro account
In correspondent banking, an account held by a customer bank on the books of another bank acting as a service provider. The other bank regards this account as a “loro account”. Antonym:
loro account