Delivery versus payment

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Delivery versus payment is used to reduce risk in the settlement of a financial transaction. Ideally, title to an asset and payment are exchanged simultaneously. This may be possible in many cases such as in a central depository system like Depository Trust Corporation or Euroclear or if a bill of lading is sent through the banking system. In other cases, delivery versus payment may not be possible. In foreign exchange trading, delivery is made in the home country of each currency. Due to differences in time zones, banking hours in the two home countries may not overlap. In 1974 Herstatt Bank had received all of its foreign currency payments but was closed by German regulators before it had made any of its USD payments.

There is also non-DVP trading.