Receive Versus Payment - RVP

AAA

DEFINITION of 'Receive Versus Payment - RVP'

A settlement procedure in which an institutional sell order is accompanied by the requirement that cash only be accepted in exchange for delivery upon settlement of the financial transaction. Receive versus payment provisions arose when institutions were prohibited from paying money for securities until they held the securities and they were in negotiable form.


Also called receive against payment (RAP).

INVESTOPEDIA EXPLAINS 'Receive Versus Payment - RVP'

A significant source of credit risk in securities settlement is the principal risk associated with the settlement date. The idea behind the receive versus payment/delivery versus payment system is that part of that risk can be removed if the settlement procedure ensures that delivery occurs only if payment occurs (in other words, that securities are not delivered prior to the exchange of payment for the securities). The system helps ensure that payments accompany deliveries, thereby reducing principal risk, reducing the chance that deliveries or payments would be withheld during periods of stress in the financial markets and reducing liquidity risk.

RELATED TERMS
  1. Commodity

    1. A basic good used in commerce that is interchangeable with ...
  2. Security

    A financial instrument that represents: an ownership position ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop ...
  4. Settlement Date

    1. The date by which an executed security trade must be settled. ...
  5. Delivery Date

    1. The final date by which the underlying commodity for a futures ...
  6. Delivery Versus Payment - DVP

    A securities industry settlement procedure in which the buyer's ...
RELATED FAQS
  1. What is the benefit of the Modified Internal Rate Of Return (MIRR)?

    The modified internal rate of return (MIRR) is a financing metric used in business capital budgeting. Its primary benefit ... Read Full Answer >>
  2. Why is the Modified Internal Rate Of Return (MIRR) preferable to the regular internal ...

    Even though the internal rate of return metric is popular among business managers, it tends to overstate the profitability ... Read Full Answer >>
  3. Who sets the guidelines for accounting principles?

    While the generally accepted accounting principles (GAAP) are not a strict requirement of all U.S. corporations, the guidelines ... Read Full Answer >>
  4. Which US cities have the highest number of high-income households?

    According to the most recent U.S. Census report on the geographic concentration of high-income households conducted in 2 ... Read Full Answer >>
  5. What happens when a company defaults on its commercial paper obligations?

    As a practical matter, the Issuing and Paying Agent, or IPA, is responsible for reporting the commercial paper issuer's default ... Read Full Answer >>
  6. How can I calculate compounding interest on a loan in Excel?

    Compound interest is the amount of interest on a principal amount, along with the accumulated interest on the principal from ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  2. Economics

    Understanding Implicit Costs

    An implicit cost is any cost associated with not taking a certain action.
  3. Investing Basics

    Do You Know These Odd Investing & Business Terms?

    Think investment talk is boring? There are plenty of terms to liven up any conversation about Wall Street and finance. You should try some of them out.
  4. Professionals

    How Financial Advisors Lose Clients

    Being a financial advisor isn't easy, but your chance of success is much higher if you avoid the most common mistakes that lead to client attrition.
  5. Professionals

    Finding a Top Financial Advisor in Canada

    Choosing a financial advisor is a difficult and important job. A ranking of Canadian advisors can help you make the right decision.
  6. Economics

    What Does Finance Cover?

    Finance is the study of banking, leverage, credit, capital markets, money and investments, along with how they are used by individuals and companies.
  7. Economics

    How to Calculate Sustainable Growth Rate

    Sustainable growth rate is the rate at which a company can grow without having to borrow money to fund its growth.
  8. Economics

    What Does Liquidation Mean?

    Creditors liquidate assets to try and get as much of the money owed to them as possible.
  9. Investing

    What is Basel III?

    The purpose of the Basel accords is to improve the worldwide bank regulatory framework.
  10. Personal Finance

    Financial Planning: Can You Do it Yourself?

    There's no shortage of financial advice out there, but do you have the inclination, time and skills to do it yourself?

You May Also Like

Hot Definitions
  1. Radner Equilibrium

    A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then ...
  2. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  3. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  4. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  5. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  6. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!