Counterparty
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Counterparty
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Counterparties
The persons or institutions engaging in a transaction. That is, the buyer and the seller of a good are the counterparties to the sale of that good. While it could apply to any transaction, the term is most common when referring to the counterparties of a swap.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Counterparty.
In any financial contract, the persons or institutions entering the contract on the opposite sides of the transaction are called the counterparties.
For example, if you sign a contract to sell an item that you produce to a buyer, you and the buyer are counterparties to the contract.
Similarly, the counterparties in financial transactions known as forwards or swaps are the banks or corporations that make deals between themselves to protect future cash flows or currency values.
Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.