Coprocess today launched a new service. We are making available information about multilateral netting regulations. We believe we are the first company to make this information freely available.
What are netting regulations?
Intercompany or multilateral netting is a very powerful tool allowing multinational companies to offset intercompany settlements. In an ideal world payment amounts would be offset against receipts and settled in the business unit’s local currency. For many countries this is allowed, is common practice and is the optimal way to run netting. See our new Netting Regulations document under the column Full Netting Allowed.
However, for other countries there are some restrictions on the use of netting. This could be:
- Netting is allowed but requires central bank approval
- Netting is allowed but conversion to local currency is not
- Netting is allowed but one must separate payments from receipts
- Netting not allowed
So netting regulations might involve the restricted use of various currencies or restrictions based on the business unit’s country. Our netting regulation page aims to show you what type of netting can be done in any given country. Coprocess, with so many clients in so many countries, hopes to cover most of the locations where business is done. Be aware of course that not every netting system can accommodate settlement in line with the rules.
NB. All information given to Coprocess by our clients that forms part of this document has been openly given.
The benefits from netting can be substantial, for example, please see this article by Alstom on how they included their Chinese affiliates in their existing global netting. As markets liberalise the ability to be part of a netting solution is becoming more and more widespread, c.f. Eastern Europe and Asia. Many of our clients are already in these markets.
What is available?
We have set up a new page on the website with a link to a Google spreadsheet. Coprocess will update and maintain this document periodically. It is also available as a PDF document. If you would like to embed this document, on your own website for example, to take advantage of any updates automatically, please write and ask us for the code.
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