counterparty risk

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Also found in: Financial.
Related to Counterparty Risks: Counterparty credit risk

counterparty risk

n
(Law) the risk that a person who is a party to a contract will default on their obligations under that contract
References in periodicals archive ?
Over the past several years, XYZ has begun to pay more attention to the counterparty risks posed by its banks, and in deciding which bank to award its current swaps business, the company wanted to take the banks' credit profiles into consideration as it weighed their pricing differences.
When XYZ had executed derivatives trades in the past, counterparty risk was not top-of-mind.
Eurex Clearing claimedits actions directly mitigated counterparty risks, thus contributing to the integrity and stability of markets.
When buy-side firms set up their broker panels, it is often only with half an eye on counterparty risk - spreading their business around the providers they feel comfortable with in terms of risk and quality, and establishing multiple commission sharing agreements (CSAs) so as not to rely too much on one party through which commission payments flow.
The new service will mitigate the counterparty risks and reduce the inefficiencies that they say characterise the hedge fund/prime broker/executing broker processing chain.
Because clearing concentrates and often mutualizes counterparty risks, some type of government oversight of clearing systems may be appropriate.
The content of the book is even more relevant in light of the recent proposals of the Basel Committee of Banking Supervision for the changes in the regulatory capital on counterparty risks.
Trades are cleared centrally with NASDAQ OMX Stockholm's clearing house in order to reduce counterparty risks and simplify administration.
The Federal Reserve, the Comptroller of the Currency, and the SEC all have carefully reviewed the practices that entities they oversee have employed to manage counterparty risks vis-a-vis LTCM and other highly leveraged firms.
Texla has an extremely experienced team that appreciates the depth of our analysis and products, and we're truly gratified that they see Rapid Ratings adding such significant value to the monitoring of their counterparty risks.
Fitch also noted that while a government-backed settlement has reduced exposure to the financially distressed state utilities and state electricity boards, residual counterparty risks remain.
Subsequent efforts will focus on, among other things, the operational risk and basis risk of broker dealers and the management of counterparty risks by protection buyers.