Delivery vs. Payment
Most securities today are issued in book-entry form and do not involve the ownership of physical certificates. Book-entry securities exist as a computer record on the books of the issuer and the investor’s broker-dealer. The sole evidence of ownership is the trade confirmation issued by the broker-dealer and the monthly statements that the brokerage firm provides.
Member firms must use the facilities of a securities depository for the book-entry settlement of securities transactions. Book-entry transactions may be settled by delivery vs. payment or receipt vs. payment.
Delivery vs. payment (DVP), or cash on demand, simply means that delivery and payment must occur simultaneously. Receive vs. payment (RVP), or cash on delivery, is its counterpart. DVP means that a buyer does not have to pay for its purchased securities until it receives them. RVP means that a seller will not receive payment in cash until it delivers the securities. A DVP/RVP account must be approved by a registered clearing agency that uses an automated confirmation and acknowledgment syst