Risk Terms

Settlement Risk

Definition

What is Settlement Risk?

The risk that one side of a transaction delivers while the other does not.

Example in practice

Cash is sent but the securities fail to arrive on settlement day.

Keep learning

The possibility of loss because broad market prices or rates move against an investment.

The possibility that a borrower or issuer will fail to make promised payments or suffer a downgrade.

The possibility that changing market interest rates will reduce an investment's value or income appeal.

A day on which relevant financial institutions and markets are open for normal processing.

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