When you invest, trade, or even save money in a bank, you’re trusting someone else to honour their commitments. This is the heart of counterparty risk—the chance that the other party in a financial transaction could fail to deliver on their promises. In 2025, counterparty risk is a hot topic for Australians, as new financial policies, global shocks, and tech disruptions make it more relevant than ever.
Why Counterparty Risk Matters in 2025
The collapse of several global lenders in late 2023 and early 2024 has put counterparty risk under the microscope for regulators and investors alike. In Australia, APRA and ASIC have ramped up scrutiny on banks and funds, with stress-testing requirements and new reporting standards introduced in Q1 2025. Even everyday Australians are feeling the ripple effects, as superannuation funds and ETFs revisit their exposure to foreign and non-bank entities.
- Global bank failures have highlighted vulnerabilities in international financial networks.
- Crypto exchanges and decentralised finance platforms remain outside the full regulatory net, increasing risk for retail investors.
- Australian regulations in 2025 require more transparency on who’s holding your assets and how they’re protected.
Whether you’re trading shares, investing in property, or using buy-now-pay-later apps, understanding counterparty risk is vital for making informed decisions.
Types of Counterparty Risk Australians Face
Counterparty risk isn’t limited to one sector. Here’s how it shows up in different corners of the Australian financial landscape:
- Banks and Lenders: Deposits up to $250,000 per person per ADI are covered by the Financial Claims Scheme, but amounts above that or money held in non-bank institutions could be at risk if the entity fails.
- Superannuation and Managed Funds: If a fund manager or custodian faces financial trouble, delays or losses can occur, especially if assets are rehypothecated or held offshore.
- Derivatives and Contracts: If you’re trading options, CFDs, or futures, there’s a risk your broker or counterparty might default, especially in times of market stress. The 2025 ASIC reforms now require clearer disclosure of these risks in product documentation.
- Peer-to-Peer and Crypto Platforms: With minimal regulation, platforms can collapse or be hacked, leaving investors exposed. The new Digital Asset Regulation Bill 2025 sets minimum reserve requirements for licensed crypto exchanges, but enforcement is still catching up.
Real-world example: In March 2024, an Australian P2P lending platform entered administration after a key international counterparty defaulted, freezing tens of millions in investor funds. This event spurred the 2025 tightening of disclosure rules and stress-testing for alternative lenders.
How to Manage and Mitigate Counterparty Risk
While you can’t eliminate counterparty risk, you can take practical steps to reduce your exposure:
- Diversification: Don’t put all your eggs in one basket. Spread funds across multiple banks, platforms, or investment types—especially if you have more than $250,000 in deposits.
- Know Your Provider: Research the financial health, regulatory status, and history of any institution or platform before handing over your money. Check APRA and ASIC registers for up-to-date licensing information.
- Read the Fine Print: Look for clear explanations of how your assets are held, what happens if the provider fails, and whether any government protections apply.
- Stay Informed: Watch for policy updates, new regulations, or warning signs in the news. The 2025 ASIC ‘Counterparty Transparency’ portal makes it easier to track institutions’ risk disclosures and incident reports.
- Consider Professional Custody: For larger or complex investments, using a third-party custodian can provide extra protection—especially with the new 2025 APRA custody standards for super and managed funds.
For businesses, the challenge is even greater. Supply chain finance, trade credit, and commercial contracts all carry counterparty risks that can threaten cash flow and growth. The Australian Small Business and Family Enterprise Ombudsman now recommends annual counterparty risk reviews for SMEs, with template checklists released in April 2025.
The Bottom Line for 2025
Counterparty risk isn’t just a technicality for traders and bankers—it’s a real-world issue for anyone who wants to protect their savings and investments. With new regulations, digital disruption, and global uncertainty, Australians in 2025 need to be more vigilant than ever about who’s holding their money and how secure it really is. Make counterparty risk checks part of your regular financial health routine, and you’ll be better prepared for whatever the markets throw your way.
