Monday, June 20, 2005
The reporting triangle
Crossing and Netting
Two terms that define related but separate ideas.
Netting is when you trade buy 20, sell 15 with the same counterparty, and so only pay for and deliver 5.
Crossing is taking two orders from different counterparties and just executing the difference. The problems are when the two net to zero, and what the market regulations happen to be for the market on which they are traded.
Netting is when you trade buy 20, sell 15 with the same counterparty, and so only pay for and deliver 5.
Crossing is taking two orders from different counterparties and just executing the difference. The problems are when the two net to zero, and what the market regulations happen to be for the market on which they are traded.
