The increase in market integration and renewable penetration in European countries highlights the importance of balancing market integration. We use a DC optimal power flow (DCOPF) based balancing energy market formulation on a modified version of the IEEE 30-bus test system. The impact of cross-border exchange of balancing energy in relation to local balancing is assessed. By calculating the net transfer capacities (NTC) from the maximum transmission capacities, NTC based balancing market formulation is also considered for comparison. With a possibility of exchanging balancing energy between zones, a significant reduction in balancing costs and net imbalances is observed compared to local balancing. For both balancing market formulations, about half of the imbalances are netted when there is a possibility of balancing energy exchange. Results also show that with a possibility of inter-zonal balancing energy exchange, NTC based balancing is more expensive than the DCOPF approach. This is because the units committed for balancing and the flows paths taken are not identical for both arrangements. © 2015 IEEE.