As part of the net-net process, DTC employs a netting procedure with NSCC called cross-endorsement. Under cross-endorsement, each Participant's net debit at one organization is netted against the amount of its net credit, if any, at the other organization.
Looking back at the previous example in the Overview of End-of-Day Settlement, if Participant 1 had a net credit of $1 million at NSCC, it would be applied to its DTC net debit of $1 million, making its DTC net balance zero. This would make Settling Bank ABC's net-net balance zero and eliminate the need to settle a debit with DTC. (Participant 1's net balance would be zero after the cross-endorsement process; Participant 2's net balance would still be a debit of $1 million, but this debit would be offset by Participant 3's net credit of $1 million.) While the cross-endorsement process impacts the net-net figures of Settling Banks by affecting the net balances of the Participants for which they settle, the process is transparent to Settling Banks and is simply a component of each Participant's net balance.