What is a Counterparty?

Definition of Counterparty: It is defined as an opposite party in the transaction of a currency. If you are among those purchasers, the counterparty will play the role of a seller. The main danger for both the parties is will the counterparty survive up to the obligations of the settlement by either offering good money or title. In several circumstances, it is found that the counterparty in the financial transaction is not known. Moreover, in the Forex trading world, the broker plays the role of counterparty, no matter whether he is an ECN which stands for Electronic Communications Network or a market maker. Every broker plays the role of counterparty in the transaction.