Net Settlement and Multilateral Clearing Risk

While RTGS systems settle payments immediately, many financial transactions are processed through Net Settlement Systems (NSS) and multilateral clearing arrangements, which net obligations at the end of a cycle. These systems, particularly those run by central counterparties (CCPs) and clearing houses, introduce **multilateral clearing risk**, as the failure of one participant can cascade risk across the entire network. This course provides a detailed examination of the mechanics of NSS, the methodologies for calculating net settlement positions, and, critically, the sophisticated risk management frameworks required to ensure settlement finality. Participants will analyze the models, collateral requirements, and default management procedures used to protect the system from systemic failure, with a focus on international regulatory standards and best practices.