Internal factoring and Pre-settlement risk: Difference between pages
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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. | |||
== See also == | == See also == | ||
* [[ | * [[Credit risk]] | ||
* [[ | * [[Hedging]] | ||
* [[Insolvency]] | |||
Revision as of 14:20, 23 October 2012
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.
See also
