enum class NetType
Enum for the types of netting that can be applied to state objects. Exact behaviour for each type of netting is left to the contract to determine.
CLOSE_OUT |
Close-out netting applies where one party is bankrupt or otherwise defaults (exact terms are contract specific), and allows their counterparty to net obligations without requiring approval from all parties. For example, if Bank A owes Bank B £1m, and Bank B owes Bank A £1m, in the case of Bank B defaulting this would enable Bank A to net out the two obligations to zero, rather than being legally obliged to pay £1m without any realistic expectation of the debt to them being paid. Realistically this is limited to bilateral netting, to simplify determining which party must sign the netting transaction. |
PAYMENT |
"Payment" is used to refer to conventional netting, where all parties must confirm the netting transaction. This can be a multilateral netting transaction, and may be created by a central clearing service. |