Q&A: How safe are counterparties?

Before the financial crisis struck, of all the risks in the market it seemed ‘counterparty’ was nowhere near the top of the list. Today it is. But what exactly are counterparties and how can an adviser work out how safe they are? Q. What is a counterparty? A. A counterparty is anybody offering a part of a structured product, so it could be the deposit taker for a structured deposit. For a structured investment product it could be the bank issuing what we call a debt such as a medium term note. Q. What is that? A. A medium term note is a bank loan, but unlike the bank loans we are u...