Regulation EE

DEFINITION of 'Regulation EE'

A regulation set forth by the Federal Reserve. Regulation EE, also sometimes referred to as netting eligibility for financial institutions, gives banks permission to settle mutual obligations at their net value instead of their gross value. This form of settlement is known as contractual netting.

BREAKING DOWN 'Regulation EE'

Regulation EE allows banks to settle obligations they have to each other through the use of bi- or multi-lateral netting contracts. Securities broker/dealers can also settle trades in this manner. Members of clearing organizations are likewise included.

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