Counter-party Risk Reduction

Stock, Commodity & Currency Research | SWOT Analysis, WACC » Free Financial SWOT Analysis (Strengths, Weaknesses, Opportunties, Threats) » Counter-party Risk Reduction

The need to reduce counter-party risk by companies that do not trade on established exchanges will have a great reason to start trading their instruments on established derivative exchanges to reduce long term counter-party risk, which is the risk that the one of the two parties involved in a deal by not be able to uphold their end of the deal. This offers risk of non-payment to the party, which upholds their end. To reduce risk, the two parties can trade with each other with a third-party exchanges while handles the transaction to make it more uniform and transferable and can reduce the overall risk of the transaction.

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