DVP/RVP Transactions
Chapters in this video
- 0:00 The midnight parking lot standoff: settlement risk defined
- 1:37 DVP and the simultaneous briefcase swap
- 2:37 DVP equals COD: the exam trap
- 2:40 RVP and the 180-degree camera flip
- 3:56 Ivan, Riley, and Carla: the institutional settlement flow
- 5:32 Regular settlement versus DVP: the showdown
- 6:16 Rapid-fire exam recap
What this video covers
- Why DVP and cash on delivery (COD) are the exact same thing, and how the exam uses both terms interchangeably to test your attention
- How DVP eliminates settlement risk by ensuring securities and cash exchange simultaneously, so neither party performs first
- Why RVP is simply the seller's mirror perspective of the same DVP transaction, not a different settlement method
- Which market participants use DVP/RVP (institutional investors with separate custodian banks) and why retail customers never do
- The actual settlement flow: broker-dealer executes the trade, then the custodian bank handles the simultaneous exchange on settlement date
- How regular T+1 settlement differs from DVP/RVP in terms of custodian involvement, governing rules, and risk profile
- The COD orders rule under the National Securities Clearing Corporation (NSCC) framework that governs these institutional settlements
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