Pre-Settlement Risk

Pre-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. A failure to deliver can occur because of the negligence or deliberate withholding on the part of the seller. If a buyer does not receive the securities, he/she is not obligated to make payment until delivery is made, but it renders him/her unable to resell or conduct other activities that would advance his/her investment goals.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Pre-Settlement risk: it is also known as "Replacement risk", and it refers to the loss from replacing open contracts with the defaulting participant.