Delivery Versus Payment
Delivery versus payment (DVP) is a settlement mechanism that ensures the delivery of securities occurs only if the corresponding payment is made. It helps reduce principal risk in securities trades by linking the transfer of securities and funds.
Example: Example: In a U.S. market, a 1,000-share trade is settled under a DVP arrangement, with securities delivered to the buyer and payment credited to the seller in the same settlement window.
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