Counterparties

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Counterparties are the parties taking each side of an options or futures position, or on either side of a swap. In the over-the-counter market, the term can refer to brokers, investment banks or other securities or derivatives dealers.

In an OTC swap, the counterparties depend on each other's secure credit rating to fulfill the agreement; in a futures or options contract, an exchange generally provides the central counterparty that guarantees the trade for both sides.



References