What is the process of Novation?
Novation takes place when a new contract is substituted for an existing one between the same parties (the contractual terms remaining the same), or there is a change of parties. The netting scheme adopted by CCIL is netting by novation where the bilateral relationship between the two participants/members is substituted with bilateral contracts between each participant/member and CCIL. The net positions of all member banks, both in INR and USD, are computed by a multilateral netting of all accepted trades. Novation takes effect from the moment a trade is accepted by CCIL for settlement.
