Search: Close-out netting

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RBA Glossary definition for Close-out netting

Close-out netting – An arrangement to settle all contracted but not yet due liabilities to, and claims on, an institution by a single payment, immediately upon the occurrence of one of a list of defined events such as the appointment of a liquidator to that institution.

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Introduction

1 Dec 1994 RDP 9409
Marianne Gizycki and Brian Gray
the legal issue is the extent to which such close-out netting contracts are enforceable at law. ... Where such laws exist, close-out netting would have little meaning since, for the failed company, only favourable contracts would be recognised.
https://www.rba.gov.au/publications/rdp/1994/9409/introduction.html
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OTC Derivatives Reform: Netting and Networks | Conference – 2013

19 Aug 2013 Conferences
Alexandra Heath, Gerard Kelly and Mark Manning
values or at values reflecting any loss to the surviving party from replacing the trades (so-called close-out netting). ... Such losses arise when the market price of the contract moves adversely between the default event and the surviving counterparty's
https://www.rba.gov.au/publications/confs/2013/heath-kelly-manning.html

December: 1997-Sample Questionnaire

9 Mar 2023 Media Release
8. Does your institution engage in formal or informal payments netting arrangements for foreign exchange settlements? ... If so, to whom? do these arrangements include close-out netting provisions in the event of default?
https://www.rba.gov.au/media-releases/1997/mr-97-22-fxsp/annex-b.html

December: 1997-Risk Management Practices

9 Mar 2023 Media Release
While some of these agreements provide for payments netting as an option, all have close-out netting provisions in the event of a default by one party. ... The RBA has long supported the introduction of legislation to validate netting arrangements in
https://www.rba.gov.au/media-releases/1997/mr-97-22-fxsp/risk-management-practices.html

December: 1997-Glossary

9 Mar 2023 Media Release
Netting may take several forms which have varying degrees of legal enforceability in the event of default of one of the parties (see also close-out netting, netting by novation and ... Depending on the legal system, obligation netting can find a legal
https://www.rba.gov.au/media-releases/1997/mr-97-22-fxsp/annex-e.html

Default Risk and Derivatives: An Empirical Analysis of Bilateral Netting

30 Nov 2009 RDP PDF 104KB
the legal issue is the extent to which such close-out netting contracts areenforceable at law. ... Where such lawsexist, close-out netting would have little meaning since, for the failed company,only favourable contracts would be recognised.
https://www.rba.gov.au/publications/rdp/1994/pdf/rdp9409.pdf

RESERVE BANK OF AUSTRALIA FOREIGN EXCHANGE SETTLEMENTPRACTICES IN AUSTRALIA ...

18 Dec 1997 Media Release PDF 268KB
5.3.1 Counterparty exposure limits.355.3.2 Netting arrangements.355.3.3 Other risk management techniques.36. 5.4 INTERNATIONAL INITIATIVES. ... some form of netting for foreign exchange settlements, despite thecurrent legal uncertainty surrounding this
https://www.rba.gov.au/media-releases/1997/pdf/fxsp.pdf

The Model

22 Nov 2016 RDP 2016-07
James Hansen and Angus Moore
For instance: we do not consider how networks affect the structure of risk and the efficiency of netting arrangements (e.g. ... Both have occurred in recent practice: SwapClear was able to close out the Lehman Brothers portfolio in 2008 without exceeding
https://www.rba.gov.au/publications/rdp/2016/2016-07/model.html
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Central Counterparty Links and Clearing System Exposures

2 Feb 2015 RDP PDF 3395KB
For participantsi and j, let Xki j represent the net obligation of i to j in product k that could accruein the future over the close-out period. ... While participants may have an expectation that their positions will beprofitable, intermediate gains and
https://www.rba.gov.au/publications/rdp/2013/pdf/rdp2013-12.pdf

Data and Exposure Analysis

29 Sep 2015 RDP 2015-02
Alexandra Heath, Gerard Kelly and Mark Manning
The future regulatory minimum in non-centrally cleared settings is ten days, reflecting the likelihood that it will be more difficult to close out positions in a decentralised setting than via ... Initial margin again increases with the assumed closeout
https://www.rba.gov.au/publications/rdp/2015/2015-02/data-exposure-analysis.html
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