Defeasance is the setting aside by a borrower of cash or bonds sufficient to service the borrower's debt. Both the borrower's debt and the offsetting cash or bonds are removed from the balance sheet. In securities trading, where a clearing house becomes counterparty to each side of a trade, after the trade has been agreed. This is necessary to facilitate netting, and reduce counterparty risk exposure. The term has become popular recently, because of the growth of central counterparty clearing services in European cash equities markets.
Barry Goldsmith
| APA | Barry Goldsmith. (2010). defeasance. Retrieved September 23, 2026, from http://smartdefine.org/defeasance/definitions/1151681 |
| Chicago | Barry Goldsmith. 2010. "defeasance" http://smartdefine.org/defeasance/definitions/1151681 (accessed September 23, 2026). |
| Harvard | Barry Goldsmith 2010, defeasance, Smart Define, viewed 23 September, 2026, <http://smartdefine.org/defeasance/definitions/1151681>. |
| MLA | Barry Goldsmith. "defeasance" 21 October 2010. Web. 23 September 2026. <http://smartdefine.org/defeasance/definitions/1151681> |