Counter-party

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Written on Aug 20, 2021
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The other party in any transaction. For an exporter, the counter party is the foreign customer; for a lender, the counter-party is the borrower. In any transaction, counter-party risk is the risk that the other parties may fail to fulfil their side of any contract or informal bargain. In many markets, market-makers can reduce counter-party risks for both sides by substituting themselves as the counter-party for both outside buyers and sellers. Outsiders are left dealing with ‘the market’, and do not have to worry about the solvency or honesty of a particular trading partner.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight

James Knight

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James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets. His main focus is on improving financial literacy among casual investors. He has been with Invezz since the start of 2021 and has been...