The risk that an expected settlement amount will not be made on time. The establishment of netting systems is a direct consequence of efforts to minimise settlement risk. See Netting.
The risk that a party will default on one or more settlement obligations to its counter party.
The potential loss as a result of failure to settle, for whatever reason other than default, by the counterparty.
The risk that operational difficulties may prevent the settlement of a transaction even when the counter party is able to perform.
The risk that occurs when there is a non-simultaneous exchange of value and one party defaults.
The risk that, for whatever reason (but most usually, administrative difficulties), a transaction is unable to settle, leaving one side of the bargain short of the security it thought it had purchased, and the other side with a security it thought it had sold.
The risk that one party will deliver and the counterparty will not be able to pay and vice versa.
Where a payment is made to a counter party before the counter value payment has been made. The risk is that the counter party's payment will not be received.
Risk associated with the non settlement of the transaction by the counter party.
the risk that arises when payments are not exchanged simultaneously. The simplest case is when a bank makes a payment to a counterparty but will not be recompensed until some time later; the risk is that the counterparty may default before making the counterpayment. Settlement risk is most pronounced in the foreign exchange markets, where payments in different currencies take place during normal business hours in their respective countries and can therefore be made up to 18 hours apart, and where the volume of payments makes it impossible to monitor receipts except on a delayed basis. This type of risk afflicted counterparties of Germanyâ€(tm)s Bank Herstatt in 1974, which closed its doors between receipt and payment on foreign exchange contracts. As a result, settlement risk is sometimes called Herstatt risk. see also credit risk
general term used to designate the risk that settlement in a transfer system will not take place as expected. This risk may comprise both credit and liquidity risk.
The exposure to risk of one party to another on the value date of a foreign exchange transaction contract. The risk is in the inability to effect a settlement in a currency after receiving settlement in another currency.
In relation to foreign exchange transactions, the exposure of one party to another on the value date of the contract. It is the risk that one party, having received settlement of one currency amount from the counterparty, is unable to effect settlement of the other currency amount.
See on: Wikipedia Investopedia The risk that one party will fail to deliver the terms of a contract with another party at the time of settlement. Settlement risk can be the risk associated with default at settlement and any timing differences in settlement between the two parties. This type of risk can lead to principal risk. Also known as the Herstatt risk.
Risk from possible default by a counterparty at the time an obligation is to be settled.
Settlement risk, also known as the Herstatt risk, is the risk that a counterparty does not deliver a security or its value in cash as per agreement when the security was traded after the other counterparty or counterparties have already delivered security or cash value as per the trade agreement.
