Market Participants may be subject to different risks, and to varying degrees, depending on the size and complexity of their FX Market activities, and the nature of their engagement in the FX Market. With this in mind, the principles below outline some of the good practices relevant to the key risk types applicable to FX activities.
CREDIT/COUNTERPARTY RISK
PRINCIPLE 29
Market Participants should have adequate processes to manage counterparty credit risk exposure, including where appropriate, through the use of appropriate netting and collateral arrangements, such as legally enforceable master netting agreements and credit support arrangements.
The use of master netting agreements and credit support arrangements helps to strengthen the smooth functioning of the FX Market. Other measures to manage counterparty credit risk include the accurate and timely assessment of a counterparty’s creditworthiness prior to a transaction, sufficient diversification of counterparty exposure where ap
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