ShmoopTube

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Finance a la shmoop what is delivery versus payment? alright this is delivery [Man delivering package to man and woman]

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and this is payment and this is what happens when the whole thing fails to go

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off without a hitch yeah and yeah some poor dock worker

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who's gonna have to clean all that up well when it comes to selling stock

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there's typically less bloodshed but it's no less important to make sure that [Stock delivery appears at door]

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delivery of the goods in this case maybe it's a hundred shares of get-rich-quick

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com happen simultaneously with payment for those goods or at least so that the

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payment is trackable with the delivery well delivery versus payment or DVP for

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anyone who's in a hurry is from the perspective of the buyer if you're

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looking at things from the seller's point of view it's RVP receive versus

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payment because you're receiving the dough or the payment got it [Seller and Buyer appear]

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but yeah DVP is basically a settlement system it's a way of ensuring that any

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transaction involving the sale of a security goes smoothly so that no one

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needs to have rocks tied to their ankles no cash no stash and no splash so why do [Person moving with rock attached to ankle]

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we have delivery versus payment like why is this even a thing well you could

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imagine in the past that people were paying for things that didn't exist like

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they thought they were buying 100 shares of whatever.com they paid the broker and

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while the shares disappear the broker disappeared everyone disappeared and oh

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well money's gone so what happens today is there was typically a lag in what's

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basically a mini escrow account where the money sits for a few days t plus 3 [Money appears in a vault and clock ticks]

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it used to be t plus 5 being sure that the seller actually had legal title to

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the shares that they were selling to you and that your money was in fact good and

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not Somalian warlord laundered money or at least easily identifiable Somalian

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warlord laundered money that's why there's a lag and that's why delivery

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versus payment has kind of two separate steps got it get it good! stay out of the water... [Man kicks other man into water]

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