Netting methods are financial techniques used to reduce the number of transactions between parties by consolidating multiple obligations into a single net amount. This approach helps streamline payments and minimize risks associated with credit exposure. Commonly used in trading and banking, netting can involve various forms, such as bilateral or multilateral netting, depending on the number of parties involved. In a bilateral netting arrangement, two parties offset their mutual obligations, while multilateral netting involves three or more parties. These methods are often employed in derivatives markets and foreign exchange transactions to enhance efficiency and reduce settlement costs.