Settlement Risk

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Dictionary Says

Definition of 'Settlement Risk'

The risk that one party will fail to deliver the terms of a contract with another party at the time of settlement. Settlement risk can be the risk associated with default at settlement and any timing differences in settlement between the two parties. This type of risk can lead to principal risk.
Investopedia Says

Investopedia explains 'Settlement Risk'

Settlement risk is the possibility your counter party will never pay you. Settlement risk was a problem in the forex market up until the creation of continuously linked settlement (CLS), which is facilitated by CLS Bank International, which eliminates time differences in settlement, providing a safer forex market.

Settlement risk is sometimes called "Herstatt risk", named after the well-known failure of the German bank Herstatt. On Jun 26, 1974, the bank had taken in its foreign-currency receipts in Europe, but had not made any of its U.S. dollar payments when German banking regulators closed the bank down, leaving counter parties with the substantial losses.
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'Settlement Risk'

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    ... Delivery of shares must be made in dematerialized form, and each exchange has its
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  • An Introduction To The Indian Stock Market

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    ... Delivery of shares must be made in dematerialized form, and each exchange has its
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    ... Rates vs Spot Rates; 14.46 Measuring Interest Rate Risk; 14.47 Price ... 15.12 Arbitrage;
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  • A Case Study: Earnings Manipulation And The Role Of The Media

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    ... (NYSE:CAH) to record income from a settlement before its was finalized, and
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  • Inside National Payment Systems

    http://www.investopedia.com/articles/economics/08/nps.asp
    ... out 10 principles for the prudent operation and risk mitigation for those systems -
    in particular the large value clearing and settlement systems described ...

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    ... Top 5 Low-Risk Investments To Close Out 2011. ... Low-risk is a subjective term, but
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    ... The New Risk-Factor For Forex Markets. Posted: August ... warning. Investors now
    have to try and price in the prospect of central bank risk. As ...

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