Counterparty

A counterparty is the other party that participates in a bilateral financial transaction. For a financial transaction to take place two sides have to agree to buy and sell assets respectively. A buyer becomes a counterparty to a seller and vice versa. Any entity can be a counterparty – as long as they are on the other side of a financial transaction. This can include deals between individuals, businesses, governments, or any other organization and sides of the transactions don’t need to be on equal standing.