- A term used to identify the "other" party in a two-party transaction. For example, the counterparty of a buyer is the seller to that buyer. The term counterparty is frequently used to identify the other party in repurchase agreement transactions and in interest rate swap transactions. American Banker Glossary————The other participant, including intermediaries ( intermediary), in a swap or contract. Bloomberg Financial Dictionary————The opposing side( s) of a transaction undertaken. LIFFE————The participant with whom a trade is being transacted. London Stock Exchange Glossary
* * *counterparty coun‧ter‧par‧ty [ˈkaʊntəpɑːti ǁ -tərpɑːrti] noun counterparties PLURALFORM [countable] FINANCEthe person or company who you are buying from or selling to, when you buy or sell something such as a bond:
• In traditional trading, each side of the trade must assume that the counterparty will make good on its obligation.ˌcentral ˈcounterparty FINANCEa system used in some stockmarkets in which investors do not buy and sell to each other directly, so that there is no risk that one side will not pay what is owed:
• The central counterparty effectively stands between buyers and sellers, momentarily taking the shares onto its own books during the transaction.
* * *counterparty UK US /ˈkaʊntəˌpɑːti/ noun [C]► FINANCE the buyer or the seller in a financial contract: counterparty to sb »
The counterparty to the option buyer is the option writer.
Financial and business terms. 2012.