PKMC Module IV Practice Questions - Pasaran Kewangan Malaysia Certificate (PKMC) Module IV - Risk Management And Basic Derivatives Exam

Settlement risk is the risk of loss during the execution stage where one party payments are made before receiving the counter-value, while pre-settlement risk is the risk of default during the life of the contract before settlement date. Settlement risk refers to long-term loan defaults, while pre-settlement risk is exclusive to overnight money market lending. Settlement risk is regulated by Bank Negara Malaysia, while pre-settlement risk is regulated exclusively by the Securities Commission under CMSA. Settlement risk only applies to foreign exchange spot trades, while pre-settlement risk applies only to bilateral interest rate swaps.