Series 53: 6.2.3.2. Book-Entry Automated Payment

6.2.3.2. Book-Entry Automated Payment

The payment for most book-entry trades is also accomplished automatically and quickly by moving money from one member participant’s account to another’s.

Delivery vs. payment (DVP), or cash on demand, simply means that delivery and payment must occur simultaneously. Specifically, DVP means that a buyer does not have to pay for its purchased securities until it receives them. Receive vs. payment (RVP) is similar. RVP means that a seller may require payment in cash before it delivers them. The DVP/RVP system is generally applied to transactions with institutional customers and among broker-dealers.

Sometimes customers hire a settlement agent to execute payment or delivery for a trade, that is, to settle the customer’s acc