DVP/RVP Transactions
Chapters in this video
- 0:00 The briefcase exchange: how DVP eliminates settlement risk
- 1:32 DVP versus RVP: two sides of the same mirror
- 2:04 DVP and COD are synonyms: the exam trap
- 2:24 Institutional accounts with custodian banks only
- 3:20 DVP/RVP versus regular settlement: four-way comparison
- 4:03 The four-step workflow: Carla, Riley, and the custodian
- 4:36 Order handling rules: timing and marking requirements
- 5:45 Electronic book-entry reality: modern settlement rails
- 6:12 Rapid-fire exam recap
What this video covers
- Why Delivery Versus Payment (DVP) and Cash on Delivery (COD) are exact synonyms, not separate methods
- How DVP represents the buyer's perspective (pay when securities arrive) and RVP represents the seller's perspective (deliver when payment arrives) of the same transaction
- Why DVP/RVP is strictly limited to institutional accounts with separate custodian banks, and why retail investors cannot use this settlement method
- How the simultaneous exchange of securities and cash eliminates settlement risk, contrasting with regular settlement backed by the National Securities Clearing Corporation (NSCC) guarantee
- What the COD orders rule governs for DVP/RVP, and why this differs from the SEC T+1 settlement rule for regular settlement
- When firms must obtain the agent and account details (before or at order acceptance), mark the order POD or COD, and send confirmation to the custodian bank (by end of trade date)
- Why depository-eligible transactions use electronic book-entry settlement through clearing-agency facilities rather than physical certificate exchange
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