Also found in: Dictionary, Acronyms, Wikipedia.
Related to Counterparty: Counterparty credit risk


The other participant, including intermediaries, in a swap or contract.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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


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.
References in periodicals archive ?
The only alternative for LTC writers who want to shrink their existing exposures and reinsure their business is to go to lower or non-rated reinsurers, bringing its own risks, specifically, counterparty risk.
In March 2017, the SECC capped the number of central counterparty licences at four, claiming that was a sufficient number in order to satisfy current demand.
CHANGE IN COUNTERPARTY RATINGS: The long-term rating on the Indiana Bond Bank gas revenue bonds will continue to be determined by Fitch's assessment of the transaction structure, the role of each counterparty in the structure and their credit quality.
Moody's added that after it applied its "advanced loss given failure analysis" to determine the counterparty risk assessment, "the cushion provided to obligations captured by the counterparty risk assessment bymore junior liabilities accounts for around 19 per cent of RCB Bank's tangibleassets".
Therefore, a counterparty cannot assume that a Kuwaiti counterparty's entry into an ISDA transaction is in the ordinary course of its business.
Thus, Moody's CR Assessment is an opinion of the counterparty risk related to a bank's covered bonds, contractual performance obligations (servicing), derivatives (e.g., swaps), letters of credit, guarantees and liquidity facilities.
- Short Term Counterparty Risk Assessment: Prime-2 (cr)
"We affirmed the long- and short-term counterparty credit ratings and maintained a stable outlook on ForteBank JSC (formerly known as Alliance Bank JSC), KazInvestBank, and Kazakh Agrarian Credit Corp.
Intended for researchers and graduate students in financial mathematics, this volume offers "an analytical basis for the quantitative methodology of dynamic valuation, mitigation and hedging of bilateral counterparty risk on OTC derivative contracts under funding constraints" (from the preface).
Acharya and Bisin (2014) emphasize that the risk that one's counterparty will not fulfill its obligation needs to be evaluated at the time a CDS is contracted.
Central Counterparties (CCPs) have played an integral role in reducing counterparty risk over the past few decades by guaranteeing the settlement of trades on exchanges.