Counterparty
A counterparty (sometimes contraparty) is a
Well-drafted contracts usually attempt to spell out in explicit detail what each counterparty's rights and obligations are in every conceivable circumstance, though there are limits. There are general provisions for how counterparties are treated under the law, and (at least in
Financial services sector
Within the financial services sector, the term market counterparty is used to refer to governments, public banks, national monetary authorities and international monetary organisations such as the World Bank Group that act as the ultimate guarantor for loans and indemnities. The term may also be applied, in a more general sense, to companies acting in this role.
Also within financial services, counterparty can refer to brokers,
Insurance sector
Within the insurance sector, this term is extended to include companies offering or requiring high-level retrocession of insurance risk to insurance companies in a role similar to that offered by governments. This term, over time, has become more generally applied to companies offering or requiring retrocession and other forms of reinsurance.
References
- ^ Sargent, T. J.; Velde, F. R. (2001). The Big Problem of Small Change. Princeton and Oxford: Princeton University Press.
- ISBN 9781107012028.