Quick Answer
Delivery versus payment (DVP) settlement links delivery of securities to payment for those securities. The method tests both legs of a transaction together: the securities-delivery leg and the payment leg. It also operates within delivery, reclamation, rejection, and customer-protection requirements for settlement activity.
After the trade details match, settlement must coordinate what is delivered with what is paid.
Linked Delivery and Payment
- Delivery versus payment (DVP) settlement: A method that links delivery of securities with payment for those securities.
- The transaction has two connected legs:
- Securities-delivery leg: The securities are delivered.
- Payment leg: Payment is made for the securities.
- Securities delivery → payment for those securities. The legs are linked rather than handled as unrelated events.
Exam Tip: Gotchas
- DVP tests the relationship between delivery and payment. It does not describe trade comparison, which occurs earlier and tests whether the trade details agree.
Settlement Protections and Exceptions
- Delivery requirements address bonds and other evidences of indebtedness.
- Reclamation and rejection procedures address securities transactions that require correction after delivery.
- The Customer Protection Rule addresses customer protection, reserves, and custody of securities.