Overnight Delivery Risk
The risk that occurs as a result of conducting transactions between different time zones. More specifically, this refers to how the receiving party may not necessarily know whether the other party fulfilled its obligations until the next trading day. Investopedia Says:
This risk is most evident when the time zone difference is the largest. For example, transactions that occur between a party from Tokyo and another party in New York could be a cause for overnight delivery risk. Since both locations are located in different timezones, the party in Tokyo would need to wait over night to receive confirmation that the transaction from the party in New York was completed. However, if the transaction did not go through, the partner in Tokyo would not find out until the next day, at which time it may be too late to conduct the transaction again. Related Terms:
Delivery
Forex - FX
Overnight Trading
Settlement Date
Settlement Risk |