i am not english native speaker, i am italian.

What is the meaning of "offsetting" in this passage?

The functioning of derivatives central counterparties hinges on the enforceability of two legal processes:

1) Novation: the replacement of the original contract between two counterparties with two offsetting contracts between the original counterparties and the Central Counterparty Clearing House.

  • 1
    The noun i is written I, uppercase. – Mr. Mister Aug 4 '17 at 13:33
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    Also capitalize language/nationality names (English, Italian). – user3169 Aug 4 '17 at 19:46

In a Business Dictionary you can find this:

offset: to balance one effect against an opposing effect, so that there is no great difference as a result.

So, in this context, offsetting contracts means "contracts that balance each other" in a way that one contract represents the interests of one counterparty and the other represents the interests of another counterparty.

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