A reconciliation and payment mechanism under which competing rights or interests are terminated and valued, resulting in amounts payable between contracting parties being consolidated into a single, smaller payment from one party to another. That is, the parties' gross obligations are offset against each other and treated (for payment purposes, but not for regulatory capital purposes) as a single obligation such that there is, effectively, only ever one claim in existence at any given time.

For further details, see Practice note, Netting.