A counter-party is a party with which a transaction is done.
Ex: Party A sells to Party B, then Party B is the counter-party from Party A's perspective; vice versa.
Now, the risk that the counter-party will fail to fulfil their obligations - by failing to pay or by failing to deliver securities - is called counter-party risk.
Ex: Party A sells to Party B, then Party B is the counter-party from Party A's perspective; vice versa.
Now, the risk that the counter-party will fail to fulfil their obligations - by failing to pay or by failing to deliver securities - is called counter-party risk.
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