Settlement risk


Also found in: Wikipedia.

Settlement risk

The risk that one party will deliver and the counterparty will not be able to pay and vice versa.

Settlement Risk

The risk that a trade will not settle. For example, a buyer may not receive delivery of the securities he/she bought by the settlement date, or the seller may not receive payment. This may occur because of the negligence or deliberate withholding by one party or the other. If a party does not receive the securities or payment, he/she is not obligated fulfill his/her end of the bargain until delivery or payment is made, but this can render him/her unable to conduct other activities that would advance his/her investment goals.
References in periodicals archive ?
CLS eliminates settlement risk, improves liquidity management, reduces operational banking costs and improves operational efficiency and effectiveness.
Continuous Linked Settlement will help AUB, to decrease foreign exchange settlement risk and boost operational efficiency by settling FX trades through J.
We have also benefited from a significant reduction in settlement risk as a result of operational efficiency improvements," he added.
This innovation will lower settlement costs while reducing counterparty and settlement risk," said Murray Pozmanter, managing director, DTCC Clearance and Settlement Group.
The research found that the main motivation for joining CLS Bank was the reduction of settlement risk.
Continuous Linked Settlement (CLS([R])) eliminates settlement risk through the world's first simultaneous and irrevocable global multi-currency settlement system.
New York -- The elimination of settlement risk in the world's foreign exchange markets becomes a reality today as CLS Bank International (CLS Bank) starts its Continuous Linked Settlement (CLS (TM)) service -- settling live instructions for foreign exchange trades.
In addition, the gateway monitors a bank's settlement risk position and provides settlement reports to keep a bank informed of its net settlement status.
Logica's CAS answers the needs of Central Banks by providing a solution that eliminates settlement risk for high value inter bank payments.
The SSISearch Global Directory is a banking industry initiative to create a single source of highly accurate contact information and fully authenticated standard settlement instructions to help reduce settlement risk and improve Straight Through Processing (STP).
As a founding member of CLS, Deutsche Bank has taken the lead in recognizing that reducing settlement risk is a priority for all financial institutions - whether they are CLS members or not.
Users will benefit from optimized pricing, increased access to information, and reduced transaction time and settlement risk.