How Does a Non-Custodial Model Affect Counterparty Risk in an RFQ Environment? ⎊ Path

How Does a Non-Custodial Model Affect Counterparty Risk in an RFQ Environment?

In a non-custodial RFQ model, the platform itself is not exposed to the risk of holding client funds or assets. However, the counterparties in the trade still face each other's credit risk until settlement is complete.

The platform often mitigates this by vetting participants and sometimes integrating with clearing mechanisms. Ultimately, the risk remains directly between the buyer and seller.

How Does the Regulatory Environment Differ for Custodial CEXs versus Non-Custodial RFQ Platforms?

How Does Non-Custodial Settlement Reduce Counterparty Risk in an RFQ Environment?

What Is the Impact of Netting Agreements on Counterparty Risk in OTC Derivatives?

How Does ‘Novation’ Change the Legal Relationship between Trading Parties in a CCP Environment?

What Is the Difference between a Custodial and Non-Custodial Derivatives Exchange?

Does Novation Completely Eliminate All Forms of Risk for a Market Participant?

How Does Counterparty Risk Differ between Custodial and Non-Custodial Exchanges?

How Does the Introduction of a Central Counterparty (CCP) Change the Counterparty Risk Profile?

Glossar

Counterparty Risk

Exposure ⎊ Counterparty risk represents the potential loss incurred when a trading partner defaults on their contractual obligations.