In this article, we explain the technical term netting using an example. We also show you the advantages of netting.
What is netting?
The purpose of netting is to minimise trading transactions. To this end, buy and sell orders for the same security are combined. Only the net quantity is bought or sold.
Here is an example: there are 100 buy orders and 25 sell orders for the same fund. As the orders are processed together, only 75 units of the fund need to be bought.
| Title | Quantity | |
| Purchase orders | CSIF (CH) Equity Switzerland Large Cap Blue ZB | +100 |
| Sales orders | CSIF (CH) Equity Switzerland Large Cap Blue ZB | -25 |
| Net | CSIF (CH) Equity Switzerland Large Cap Blue ZB | +75 |
Why is netting advantageous?
There are various costs that can be incurred when buying and selling securities. Most of these costs can be avoided by making a good choice of securities, but not all of them. They cannot be avoided:
- Spread costs (all funds)
- Stock exchange fees (ETFs)
- Stamp duties (ETFs or foreign index funds)
Netting is advantageous because it can reduce the number of securities actually traded on the stock exchange or with the fund provider. This can also reduce transaction costs.
When is netting used for finpension?
In the case of finpension, netting is carried out on the day of rebalancing in order to keep transaction costs as low as possible.
Good to know: Other digital asset managers cannot offer netting because they do not manage the account and custody account themselves. They have to forward the orders to the bank individually. At finpension, on the other hand, we can carry out netting because we manage the account and custody account ourselves thanks to our licence as a securities firm. This means that we are not dependent on a bank and can optimise the process for you.
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