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Settlement risk
       
 
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Settlement risk

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Settlement risk
Settlement Risk (Delivery Risk), as a particular form of Counterparty credit risk, arises from a non-simultaneous Exchange of payments. For example, a bank that makes a payment to a counterparty, but Will not be recompensed until a later date, is exposed to the Risk that the counterparty may Default before making the counter-payment. Settlement Risk is distinct from Market risk because it relates to exposure to a counterparty rather than exposure to the Underlying Risk related to the reference entity of the derivatives contract.
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