DEFINITION of 'Overnight Delivery Risk'

The risk that occurs as a result of conducting transactions between different time zones. More specifically, this refers to how the receiving party may not necessarily know whether the other party fulfilled its obligations until the next trading day.

BREAKING DOWN 'Overnight Delivery Risk'

This risk is most evident when the time zone difference is the largest. For example, transactions that occur between a party from Tokyo and another party in New York could be a cause for overnight delivery risk. Since both locations are located in different timezones, the party in Tokyo would need to wait over night to receive confirmation that the transaction from the party in New York was completed. However, if the transaction did not go through, the partner in Tokyo would not find out until the next day, at which time it may be too late to conduct the transaction again.

RELATED TERMS
  1. Third-Party Transaction

    A third-party transaction is a business deal involving a buyer, ...
  2. Credit Checking

    A check performed on the financial backing of the counterparties ...
  3. Failure To Deliver

    An outcome in a transaction where one of the counterparties in ...
  4. Third Party Beneficiary

    A person who will benefit from a contract made between two other ...
  5. Demand Guarantee

    A type of protection that one party in a transaction can impose ...
  6. American Rule

    A rule in law and economics that says attorney fees should be ...
Related Articles
  1. Investing

    Understanding Related-Party Transactions

    In business, a related-party transaction refers to a transaction where parties on both sides have a common interest or relationship.
  2. Investing

    Party City Holdings: How It's Fared Since Its 2015 IPO (PRTY)

    Learn about Party City Holding's performance as a public company. Investors would have lost much more than the Russell 2000 Index by investing after the IPO.
  3. Small Business

    Master The Art Of Negotiation

    Learn the strategies that will help you to come out on top in any negotiation.
  4. Trading

    Principal Trading and Agency Trading

    Ever wonder what happens behind the scenes when you buy or sell a stock? Read on and find out!
  5. Investing

    Arm's Length Transaction

    An arm’s length transaction describes business deals in which the buyer and seller act independently and with no interest in the other’s benefit.
  6. Investing

    Who is a Counterparty?

    The counterparty is the other party in a financial transaction.
  7. Trading

    ISDA Master Agreement

    The ISDA Master Agreement is a document outlining the terms of an over-the-counter derivatives transaction between two parties. This document serves as a standard agreement in these transactions ...
  8. Investing

    What Do Central Counterparty Clearing Houses Do?

    A central counterparty clearing house facilitates trading in European derivatives and equities markets.
  9. Small Business

    Bitcoin Transactions Vs. Credit Card Transactions

    We provide an overview of the differences between bitcoin and credit card transactions, and the advantages of using one over the other.
  10. Investing

    What is Right of First Refusal?

    The right of first refusal is a contract in which a seller grants another party the right to enter into a business transaction before anyone else.
RELATED FAQS
  1. How are arm's-length transactions determined by law?

    Determine if transactions are conducted at arm's length by checking if the parties to a contract are independent and transact ... Read Answer >>
  2. Are arm's length transactions always better than transactions not at arm's length?

    Transactions not at arm's length have real tax and other consequences for individuals and businesses, but they are not necessarily ... Read Answer >>
  3. Are any arm's-length transactions disadvantageous to both parties?

    Find out why arm's-length transactions are disadvantageous when the interests of the two parties coincide and they wish to ... Read Answer >>
  4. How do you make working capital adjustments in transfer pricing?

    Understand how working capital adjustments are applicable to transfer pricing. Learn about the arm's length standard and ... Read Answer >>
  5. What is each party's role in a reverse repurchase agreement?

    Learn about the role of each party in a reverse repurchase agreement transaction, and find out why it's different if the ... Read Answer >>
  6. What are some types of financial netting?

    Read about the different types of financial netting, which is a critical concept when competing claims exist between different ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center