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That brings up "counterparty risk".
These "synthetic" funds entail hidden counterparty risks.
Cohn called S.A.C. "a great counterparty".
"The rescue was absolutely all about counterparty risk.
You don't know what the counterparty risks are".
Every financial firm was measuring its exposure to every counterparty.
Swaps face greater scrutiny because of central counterparty clearing requirements.
In particular, policymakers want greater transparency and central counterparty clearing.
This year the direction of counterparty risk has reversed.
Then there are the counterparty risks associated with municipal swaps.
And as the market has grown, private counterparty discipline has proven inadequate.
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