There is no specific legal definition of netting. The corresponding names for netting in Chinese include balance calculation, hedging, netting, etc. The legal mechanism of netting is to use legal systems such as offset and contract renewal. Amber Credit Research Center ultimately obtains an amount of net claims or net debts from one party to the other party. For example, market traders may have the same content. For multiple transactions in opposite directions, when settling or closing the transaction, the claims of each party can be offset within equal amounts and only the balance will be paid. According to the content of netting, it can be divided into settlement netting and default netting (or close-out netting). Settlement netting means that when the transaction ends normally, the parties to the transaction For netting operations, settlement netting usually involves netting out mutual debts and claims of the same type before settlement. The purpose of settlement netting is mainly to reduce settlement risks and prevent one party from going bankrupt before payment. Even if payment is made on the same day, there is still a delivery risk. Settlement netting is not only applicable to the payment system, it is also applicable to foreign exchange, securities, etc. Delivery and settlement; default netting refers to the breach of contract by one party to the transaction, the parties to the transaction immediately terminate the transaction of the excutory contract, and the netting operation is carried out on the part that has been traded, and the losses and gains generated by each contract are offset. Afterwards, one party only pays (or declares) a balance to the other party. The main purpose of closing the transaction netting is to reduce the risk of one party's bankruptcy to the exposed contract before the settlement date.