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  • Monday, April 28, 2025
  • The Financial Encyclopedia
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Derivatives

  Derivatives   |   Terms
  • 794
  • February 23, 2022
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Boundary Risk

The risk that arises from cross-border differences among derivatives regulators on matters such as bankruptcy, accounting standards, speculation rules, etc. Some jurisdictions attempt to harmonize their laws and regulations by providing protection to innocent customers when giant institutions collapse due to busted derivatives transactions (that protection may involve schemes such as customer-funds segregation- whereby funds are removed from the accounts of the brokers to help confine their use only to finance their customers’ own trading). The legal environment in different countries may also impact the manner and timeliness by which they respond at crisis times.


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