Netting and matching
In this lesson, you'll learn how netting and matching work as hedging techniques to simplify foreign currency transactions and reduce operational risk. Netting consolidates payments within a group of companies under the same parent, while matching does the same with external parties like customers and suppliers.
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In this lesson
- 0:00 Netting and matching in hedging
- 1:02 Key differences between netting and matching
- 2:07 Multilateral netting methodology step by step
- 3:28 Clearing Co worked example setup
- 5:03 Converting transactions and calculating net positions
- 6:43 Final settlements and exam solution
About this lesson
Both techniques reduce transaction volumes, lower costs, and minimise errors—all managed through a systematic table-based approach that converts all currencies to a base currency, totals receipts and payments, and calculates net settlement amounts. You'll work through a practical example using multilateral netting to see how multiple transactions between different parties collapse into just a few final payments, making the process efficient and manageable for your exam and real-world treasury operations.
Duration: 7m
Transcript
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