Overnight Delivery Risk

AAA

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.

INVESTOPEDIA EXPLAINS '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. Rollover Credit

    Interest paid to a forex trader who holds a position overnight. ...
  2. Forex - FX

    The market in which currencies are traded. The forex market is ...
  3. Delivery

    The action by which an underlying commodity, security, cash value, ...
  4. Settlement Date

    1. The date by which an executed security trade must be settled. ...
  5. Settlement Risk

    The risk that one party will fail to deliver the terms of a contract ...
  6. Overnight Trading

    The buying or selling of currencies between 9pm and 8am local ...
Related Articles
  1. How does the foreign-exchange market ...
    Forex

    How does the foreign-exchange market ...

  2. Do I own a stock as of the trade date ...
    Options & Futures

    Do I own a stock as of the trade date ...

  3. What is Globalization?
    Investing

    What is Globalization?

  4. Ever Wanted to Own International Stocks? ...
    Economics

    Ever Wanted to Own International Stocks? ...

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center