Whose obligation is it
The counterparty is the party obliged to perform its agreed part of the contract. In a direct transaction, establish legal identity, representative authority and the obligation’s content. An intermediary may help conclude a trade without guaranteeing every payment. If a central counterparty is used, the relationship structure changes under the system rules.[13] The key question is not who sent a link, but which person must transfer money or an asset and on what documentary basis. A familiar logo, convenient interface and friendly manager do not replace that answer.
Counterparty risk arises when the other side cannot or will not perform. It differs from the issuer credit risk of the purchased security. Even where an instrument promises payments from a strong debtor, the seller may fail to deliver it. Conversely, the counterparty may deliver correctly and the issuer may later fail. These are different stages and obligation holders.
What replacement risk means
Teaching example: parties agree to transfer 100 units of a fictional asset at 50 roubles; the contract amount is 5,000 roubles. Before settlement, an equivalent available asset costs 60 roubles. If the seller fails, a replacement purchase costs 6,000 roubles. The difference is 1,000 roubles before costs. It illustrates possible replacement cost, assuming an alternative seller exists; it does not assert that the price will rise or that a dispute will favour the buyer.
Replacement cost is not always the whole contract amount. If the buyer transferred nothing, the loss structure differs from a case where money was paid but the asset was not received. If collateral was posted, establish ownership, valuation and enforceability. Draw the sequence of promises and transfers: at which step has one side performed while the other has not? The gap can concentrate the consequences of non-performance.
Execution and price are checked independently
A mechanism linking payment to asset delivery may reduce one-sided performance risk, but it does not confirm that the agreed price is economically reasonable. An acceptable price does not guarantee settlement either. Fincult warns that OTC prices may differ materially from available market references.[3] A difference alone does not prove fraud: instruments, sizes, restrictions and observation times may differ. Establish object and terms before comparing.
A non-standard contract may lack a convenient exit. Today’s offer does not mean tomorrow’s buyer exists on the same terms. Assignment, termination, early close and the amount due on termination must be read in the documents, not reconstructed from “market access” advertising. A solvent counterparty and correct calculation can still leave a liquidity problem if the owner needs an exit that the contract does not provide.
OTC may have central clearing
OTC agreement does not exclude later acceptance for clearing by a central counterparty; official MOEX material gives this conceptual counterexample.[13] But the existence of such a service somewhere does not mean every contract or client is automatically protected. Establish whether this transaction was accepted, which rules apply and who owes what. This guide does not publish fees, participant lists or current admission terms. Central clearing changes the allocation of settlement risk but does not remove price risk or operational failures.
When information is insufficient
A transaction description is incomplete if the obligated person, subject, price, transfer dates, settlement mechanism, collateral and dispute process are unknown. Do not confuse the legal possibility of a complex contract with the right of any seller to promise guaranteed income. Explaining risk does not require declaring all OTC transactions equally dangerous; it requires locating the unknown precisely. If documents cannot resolve it, intermediary confidence is not a substitute for verification.