Multilateral netting system

Multilateral netting system

Elimination of offsetting cash flows between a parent and several subsidiaries.
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CHIPS maximizes a bank's liquidity as a multilateral netting system, $1 is used 500 times in a day, while enjoying payment finality of an RTGS (real-time gross settlement system.
Thus, relatively modest end-of-day net settlement amounts in a multilateral netting system (zero in this example) may disguise substantial intraday credit exposures faced by individual banks.
Since it implemented daylight overdraft fees, the Federal Reserve has taken additional steps to help control risks in the payment system, most recently in the area of multilateral netting systems.
Second, similar arrangements have been designed to reduce credit risks and liquidity risks: multilateral netting systems and delivery-against-payment systems.
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