What changes on the balance sheet
Multilateral netting is a liquidity instrument before it is a technology. This page sets out what it does to pre-positioned liquidity, to the credit you extend, to your intraday position and to your currency exposure — in the terms a treasurer measures them.
← How settlement worksThe benefit is different on each side of a corridor
Compression does not do the same thing outbound and inbound, and conflating them is how netting gets oversold to a treasurer who runs a post-funded book.
Outbound — liquidity you never position
You fund before you pay, so the money sits in a nostro account ahead of a settlement that may or may not need it. Under netting, your cash stays in normal operational use until the settlement instant, and only the net residual is drawn against your settlement institution’s counter-attestation. Pre-positioned liquidity is eliminated where the rail permits just-in-time funding, and materially reduced where it does not.
Inbound — credit you stop extending
On payout legs you disburse first and are reimbursed afterwards, typically on a one-to-seven-day cycle. There is no pre-funding to remove. What changes is the credit: the reimbursement obligation is netted against everything else owed between the same parties in the same window, and the residual settles just-in-time rather than waiting out the cycle. Your exposure becomes the net residual for one window instead of the gross disbursement for the cycle.
Where you are active on both legs of a corridor, the two compound: outbound instructions and inbound reimbursement obligations enter the same window and offset each other directly.
Intraday liquidity, and the exposure inside the window
The FX Global Code defines this exposure precisely: it begins when a payment can no longer be recalled and ends when the counter-currency is confirmed final. The Code asks participants to reduce both the size and the duration of that exposure. Netting addresses size. Settling just-in-time against a commitment already recorded is what addresses duration.
Intraday liquidity
Your funding requirement is known at window close and drawn at the settlement instant rather than positioned in advance. The measurement your regulator already asks for — daily maximum intraday liquidity usage, available intraday liquidity, total payments — is produced per window as structured data you can feed straight into BCBS 248 reporting.
The exposure inside the window
Between recording an obligation and settling the residual you hold a net exposure to the other participants in that corridor, not a gross one. It is bounded by the net position, it lasts for the window, and it is visible to you throughout. Your own limits govern what enters: participant-configured exposure and concentration limits are enforced before an obligation is admitted, and the credit decision stays with you.
No mutualisation
There is no default fund, no loss-sharing and no member assessment. You are never liable for another participant’s failure, and you are never asked to capitalise a central counterparty. What you carry is your own net position and the liquidity risk of it, which is the exposure you already carry gross.
You hedge the net, not the gross
How value is fixed
- Every obligation is valued at a reference rate fixed when it is recorded, so the netting is deterministic and nothing settles at a stale or off-market rate
- The protocol executes no foreign exchange and takes no currency position
- Each corridor settles its net in a single designated settlement currency or asset, named in the settlement institutions’ standing instructions
- Any conversion into that currency is sourced by you or your settlement institution on the venues you already use
What that changes
- Your hedging requirement is sized to the net position, not to gross flow
- Risk notional multiplied by risk duration falls on both terms: a smaller exposure, held for a shorter window
- The corridor is defined by a currency pair rather than drawn from a fixed list — the protocol nets across the ISO 4217 universe, and a corridor opens wherever a licensed settlement institution on each side will counter-attest
- First pilots settle one-for-one in the corridor’s settlement currency, with no foreign-exchange leg at all
A corridor running US$100 million a month
An illustration of the mechanics, not a projection, and not drawn from any institution’s book. Your own figures depend on flow balance, corridor direction and your existing arrangements.
Gross arrangements today
- US$15–25 million of pre-funded nostro held against the corridor
- Settlement at T+2 to T+3
- Nostro buffers running two to three times daily need in major currencies, and five to ten times in volatile emerging-market currencies, on industry estimates
- Reconciliation largely manual, feeding your operational-risk loss and control data
Netted
- Settlement capital sized to net positions rather than gross flow
- Same-day confirmation of the settled position
- Automated reconciliation from structured messages
- Compression of up to 95% has been exercised on testnet; the realised figure depends on corridor and flow mix, and directional corridors compress materially less
All figures are from the Lagrange testnet on generated test flow, as at September 2026. Participant profiles are synthetic. No production traffic.
What your operations teams touch
Integration
Obligations are submitted by API or ISO 20022 at the treasury and payments layer. No core banking change. Your existing correspondent relationships, settlement accounts and FX arrangements stay where they are.
Messaging and reconciliation
Settlement instructions and position reporting arrive as ISO 20022 CBPR+ messages, validated against the official schemas and the CBPR+ usage guidelines. Swift conformance testing is a pre-pilot step and no Swift certification is claimed.
Your settlement institution
The net instruction is executed by your own licensed settlement institution over its existing rails, under a participation agreement and corridor rulebook. NETTA holds no funds and issues no payment. That institution is the party whose commitment makes just-in-time settlement possible, so it is part of the conversation from the start.
Model it on your own corridor
A briefing covers the settlement model, the perimeter analysis for your jurisdiction and the pilot structure. Bring a corridor and the shape of its flow and the conversation is about your book rather than ours.
Request a briefing