counterparty: meaning, definition, pronunciation and examples

Not exactly. A 'counterparty' is defined by a specific contractual relationship of mutual obligation. A client is a party you provide a service to. A client can be a counterparty in a specific contract, but not all counterparties are clients (e.g., two banks trading with each other are counterparties, not client-service provider).

Typically, a 'counterparty' implies a direct, one-to-one relationship within a given contract or transaction. A multi-party agreement has multiple bilateral relationships, so each party has several counterparties for different obligations, but the term is still used bilaterally.

Credit risk is the broader risk that any borrower will default. Counterparty risk is a specific subtype of credit risk: it's the risk that the specific opposite party in a bilateral financial contract (like a derivative) will fail to fulfil its contractual payment or delivery obligations.

Yes, but it's heavily weighted towards formal, bilateral agreements. It can be used in legal contexts (treaties, complex contracts) and occasionally in supply chain or trade discussions, but its natural home is finance and risk management.

The opposite participant in a financial contract, agreement, or transaction.

Counterparty is usually formal, technical (primarily finance, law, business) in register.

Counterparty: in British English it is pronounced /ˈkaʊn.təˌpɑː.ti/, and in American English it is pronounced /ˈkaʊn.t̬ɚˌpɑːr.t̬i/. Tap the audio buttons above to hear it.