The (counter)party's over

Welcome to FinTrends.

It’s the evolution of The Hedge, focusing on bringing you the latest trends in the world of finance, business and the wider economy.

Every week, you’ll receive a email, outlining one trend to watch.

Your inbox is full enough as it is, so every email will be short. Usually less than 150 words.

This weeks trend: Counterparty Risk

In the 2020/21 boom times, no one gave a shit how secure a company was. All anyone wanted was rockets to the moon and massive yields.

Robinhood shutting down trading on GME for liquidity reasons, while big brokers stayed open, was one of the first examples we saw of this.

Then the crypto collapse accelerated it. Depositors with Celsius, FTX and the long list of others saw what can happen when a company dies.

Now we’ve seen the same thing happen in the mainstream banking system with Silicon Valley Bank.

Sure, depositors got bailed out.

But people are starting to realise what counterparty risk really means. Expect this to become a much more important selling point for financial institutions going forward.

And expect to see a wave of new fintechs ‘solving the problem’ of counterparty risk.