Delivery versus payment

Delivery versus payment or DvP is a common form of settlement for securities. The process involves the simultaneous delivery of all documents necessary to give effect to a transfer of securities in exchange for the receipt of the stipulated payment amount. Alternatively, it may involve transfers of two securities in such a way as to ensure that delivery of one security occurs if and only if the corresponding delivery of the other security occurs.^[1]

This is done to avoid settlement risk such as where one party fails to deliver the security when the other party has already delivered the cash when settling a securities trade.