Counterparty Definition. A Counterparty is the opposite party in a currency transaction. If you are the buyer, the counterparty is the seller, and vice versa. The primary risk concern for both parties is will your respective counterparty live up to his settlement obligations by either delivering good funds or good title. In many circumstances, the counterparty in a financial transaction is unknown. However, in the forex world, your broker is your counterparty, whether he is a market maker or an Electronic Communication Network, or ECN. Each type of broker serves as a counterparty to the transaction regardless of how they may price for their services.
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