Pre-settlement risk: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Administrator (CSV import) |
imported>Doug Williamson (Add link.) |
||
| Line 4: | Line 4: | ||
A similar risk occurs in commercial contracts. Customers may become insolvent before paying for goods, and supplier insolvency may threaten production schedules. | A similar risk occurs in commercial contracts. Customers may become insolvent before paying for goods, and supplier insolvency may threaten production schedules. | ||
== See also == | == See also == | ||
| Line 9: | Line 10: | ||
* [[Hedging]] | * [[Hedging]] | ||
* [[Insolvency]] | * [[Insolvency]] | ||
Revision as of 03:44, 19 May 2016
Pre-settlement risk is the risk that one party to a contract becomes insolvent before delivering its side of the contract.
For treasurers it is vital that hedging counterparties remain solvent for the duration of the hedging contract – otherwise the hedge evaporates.
A similar risk occurs in commercial contracts. Customers may become insolvent before paying for goods, and supplier insolvency may threaten production schedules.
