Credit risk and exchange traded futures

[gonowpass]

Exchange-traded futures reduce counterparty risk but don’t address spread change or credit risk.
Why does it not address credit risk? I thought since we have an exchange as counterparty we no longer have credit risk?

 

[MrSmart]

gonowpass wrote:
Exchange-traded futures reduce counterparty risk but don’t address spread change or credit risk.
Why does it not address credit risk? I thought since we have an exchange as counterparty we no longer have credit risk?

 

[gonowpass]

MrSmart wrote:

gonowpass wrote:
Exchange-traded futures reduce counterparty risk but don’t address spread change or credit risk.
Why does it not address credit risk? I thought since we have an exchange as counterparty we no longer have credit risk?

We are now dealing with the exchange, and the exchange doesn’t have credit risk. So where does the credit risk come from?

 

[MrSmart]

It says reduce counterparty risk, not eliminate.
If you have 0.1% chance of credit risk, the whole amount is unchanged.