Substitution

The substitution of one party for another in respect of an obligation.

In a netting and settlement context, this generally equates to altering a contract between two parties so as to bring in a third party (sometimes the clearing house, as in an option and future trade) which acts as counterparty to each of the two parties and ensures the original contract between the two parties is satisfied and discharged.

See also

• Netting
• Novation
• Settlement