Full formBanking & Finance
DVPstands forDelivery Versus Payment
Full Form of DVP
What is DVP?
Delivery Versus Payment (DVP) is a securities settlement mechanism used in financial markets to ensure that the transfer of securities occurs only when the corresponding payment is made, and vice versa. This system eliminates the risk of one party defaulting after the other has fulfilled its obligation, known as principal risk. In India, DVP is widely adopted by stock exchanges like NSE and BSE, as well as by clearing corporations such as NSCCL and CCIL. It is mandated by SEBI for all trades in the cash market and is a key component of the T+2 settlement cycle. The process involves simultaneous transfer of funds and securities through depositories like NSDL and CDSL. DVP is crucial for maintaining market integrity and reducing systemic risk. Understanding DVP is essential for students preparing for banking and finance exams, including those for RBI Grade B, SEBI, and NISM certifications, as it is a core concept in risk management and settlement systems.
DVP का फुल फॉर्म
डिलीवरी वर्सस पेमेंट
Example
The regulator mandated that all institutional trades must be settled on a DVP basis to avoid settlement failures.
DVP — frequently asked questions
What is the full form of DVP?
DVP stands for Delivery Versus Payment, a settlement mechanism in financial markets that ensures simultaneous exchange of securities and funds.
How does DVP work in the Indian stock market?
In India, DVP ensures that the seller's securities are transferred to the buyer only when the buyer's payment is received, typically through clearing corporations like NSCCL, reducing settlement risk.
What is the difference between DVP and T+2 settlement?
DVP is a method of simultaneous exchange, while T+2 refers to the timeline (trade date plus two days) by which settlement must occur; DVP is often used within the T+2 cycle.