Counterparty risk

counterparty risk investment & finance definition
The risk that a party to a transaction will fail to fulfill its obligations.

Counterparty Risk
The risk associated with the financial stability of the party entered into contract with.

Counterparty Risks
Foreign Currency Inter-bank Exchange (FOREX) instruments are Positions (Buys and/or Sell) between the Client and its Counterparty and, unlike exchange-traded foreign exchange instruments which are, in effect, ...

Counterparty risks are understood to be the type and degree of risks associated with each party in a contractual arrangement. Essentially, the counterparty risk addresses the financial stability of each party involved.

Counterparty risk
The risk that the other party to an agreement will default. In an options contract, the risk to the option buyer that the option writer will not buy or sell the underlying as agreed.
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[edit] Counterparty Risk
Another dimension of CFD risk is counterparty risk, a factor in most over-the-counter (OTC) traded derivatives. Counterparty risk is associated with the financial stability or solvency of the counterparty to a contract.

Counterparty risk is essentially the risk of default on an over-the-counter transaction. If two large banks enter into a trade that is not done on an exchange, this is called an over-the-counter transaction.

counterparty risk Counterparty risk refers to the danger either side of an agreement will not... country risk When speaking of international investments, this refers to the added risk associated...

Providing a welcome counterpoint to counterparty risk, meanwhile, Navios Maritime Partners' (NYSE: NMM ) own exposure to Korea Line's troubles has been effectively mitigated by insurance contracts designed to protect against just such an ...

There are many forms of credit risk; counterparty risk affects trading operations if the counterparty fails to take delivery on a security or fails to pay at settlement of a derivatives contract.

No matter how high interest rates become, the price of the bond will never go below $1,000 (ignoring counterparty risk). This bond's price sensitivity to interest rate changes is different from a non-puttable bond with otherwise identical cashflows.

Central Counterparty - stands between two parties to a trade to eliminate counterparty risk by ensuring that settlement takes place
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The ASX Group's activities span primary and secondary market services, including capital formation and hedging, trading and price discovery (Australian Securities Exchange); central counterparty risk transfer (ASX Clearing Corporation); ...

This comes into play in all trades between Bourse member firms. By eliminating counterparty risk, it cuts short the chain reaction a fail would otherwise trigger and has reduced uncleared trades in Paris to virtually nil.

Credit Risk - The idea that an outstanding currency position will not be repaid as agreed by the counterparty, either voluntarily or not. Also known as counterparty risk.

of loss in foreign exchange transactions and cross-currency transactions whereby one party will deliver but the counterparty financial institution will fail to complete it's end of the contract. Also known as settlement risk or counterparty risk.

This is necessary to facilitate netting, and reduce counterparty risk exposure. The term has become popular recently, because of the growth of central counterparty clearing services in European cash equities markets.

or offsetting of the risks threatening the profitability or existence of an organization. With respect to foreign exchange, it involves, among other considerations, market, sovereign, country, transfer, delivery, credit, and counterparty risk.

EFP gives the flexibility of transferring positions from the cash market to futures market, or vice versa. This product is widely used by hedge funds for reasons such as to mitigate counterparty risks, ...

foreign currency loan (with settlement in dollars), the borrower may face basis risk: the possibility that a difference arises between the swap market's exchange rate and the exchange rate on the home market. The lender also bears counterparty risk.

In addition, a business or financial institution may use credit ratings to assess counterparty risk, which is the potential that another institution, with which it is doing business, will default.

If you are trading commodity futures and wish to make delivery of the commodity you will want the clearing house to cover counterparty risk. That means if the buyer will not or cannot pay for your commodity the exchange will pay.

See also: Counterparty, Risk, Market, Stock, Exchange