Welcome to the InfoSci Platform
Settlement Risk

Settlement Risk

Copyright: © 2011 |Pages: 12
ISBN13: 9781615206452|ISBN10: 1615206450|EISBN13: 9781615206469
DOI: 10.4018/978-1-61520-645-2.ch003
Cite Chapter Cite Chapter

MLA

Masashi Nakajima. "Settlement Risk." Payment System Technologies and Functions: Innovations and Developments, IGI Global, 2011, pp.17-28. https://doi.org/10.4018/978-1-61520-645-2.ch003

APA

M. Nakajima (2011). Settlement Risk. IGI Global. https://doi.org/10.4018/978-1-61520-645-2.ch003

Chicago

Masashi Nakajima. "Settlement Risk." In Payment System Technologies and Functions: Innovations and Developments. Hershey, PA: IGI Global, 2011. https://doi.org/10.4018/978-1-61520-645-2.ch003

Export Reference

Mendeley
Favorite

Abstract

First, the source of settlement risk is identified in two kinds of settlements; the “simple settlement” and “exchange-for-value settlement.” Second, the differences are clarified between “settlement risk” and “pre-settlement risk.” Third, the classifications of settlement risk is explained, which include “credit risk,” “liquidity risk,” “systemic risk,” “legal risk” and “operational risk.” Fourth, the differences are made clear between “principal risk” and “replacement cost risk.” Fifth, the actual examples are described, in which settlement risk turned into reality. They include the famous “Herstatt Bank incident,” “BCCI incident” and “Bearing incident.” Finally, the measures how to reduce settlement risk are discussed after identifying the exposures of settlement risk. Several mechanisms to reduce the risk, such as the netting, Payment versus Payment (PVP), and Delivery versus Payment (DVP), are described in detail.

Request Access

You do not own this content. Please login to recommend this title to your institution's librarian or purchase it from the IGI Global bookstore.