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Reducing transfers of funds between subsidiaries or separate companies to a net amount.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


Netting is a process the National Securities Clearing Corporation (NSCC) uses to streamline securities transactions.

To net, the NSCC compares all the buy and sell orders for each individual security and matches purchases by clients of one brokerage firm with corresponding sales by other clients of the firm.

Those orders can be finalized internally by adjusting the firm's books to reflect changes in ownership.

The small percentage of trades that aren't netted require firms with net short positions, whose clients sold more than they purchased, to deliver the required securities to the NSCC, or more precisely have them debited from their Depository Trust Corporation (DTC) custodial account for delivery to the NSCC.

The NSCC credits those shares to the firms with a net long position, whose clients purchased more shares than they sold.

In the final step, the DTC nets the total costs of buying and selling throughout the trading day to limit the amount of money that must be exchanged among firms. Firms with a net debit wire payment to the DTC, and firms with a net credit receive funds.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.


Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
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Netting comes in many widths, lengths and types of construction.
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(2) Global interest netting should be limited to income taxes only.
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The first step in netting is to determine the net payable or receivable for each entity.
Beginning with the enactment of the interest rate differential and continuing with each rate adjustment that has expanded the differential, Congress has repeatedly instructed the IRS to implement the most comprehensive interest netting procedures that are consistent with sound administrative practice.
Specifically, TEI recommends that the Treasury Department promptly issue regulations calling for the "netting" of interest where a taxpayer simultaneously owes and is owed interest by the federal government.
Comprehensive netting of interest on over- and underpayments represents sound tax policy and is needed -- now, not later.