Delivery Risk

A term to describe when a counterparty will not be able to complete his side of the deal, for example not being able to pay the price of the contract. This risk is very high in case of over the counter transactions where there is no exchange which can stand as a guarantee to the trade between the two parties to the contract.The risk is higher when there are economic and financial problems, as well as higher when dealing with bonds and the currency markets.

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