chaining

Chaining is a settlement arrangement in which the completion of one instruction helps make the assets or credit needed for another instruction available. By linking mutually dependent transactions, a payment or securities system may settle a larger set of queued instructions than would be possible if each instruction had to rely solely on resources already held by the initiating participant. The technique can improve liquidity efficiency, but its operation depends on the system’s risk controls, sequencing logic, and rules for using incoming settlement proceeds.