Without netting, a million trades would require a million deliveries. CNS collapses them per participant per security per day and carries unsettled positions forward, so a firm delivers or receives only the net difference.
It is also where fail-to-deliver is measured, because the fail is the net shortfall at the clearing layer rather than any individual trade going wrong.
Example: a broker's clients buy 4.1 million shares and sell 3.85 million shares of one stock. Instead of settling both, CNS leaves a single obligation to receive 250,000 shares. Settlement traffic drops by roughly 97% for that security on that day.
Related: nscc, fail-to-deliver, settlement-cycle, novation