Receive Versus Payment - RVP

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.


Filed Under: ,

comments powered by Disqus
Hot Definitions
  1. Federal Reserve Note

    The most accurate term used to describe the paper currency (dollar bills) circulated in the United States. These Federal Reserve Notes are printed by the U.S. Treasury at the instruction of the Federal Reserve member banks, who also act as the clearinghouse for local banks that need to increase or reduce their supply of cash on hand.
  2. Benchmark Bond

    A bond that provides a standard against which the performance of other bonds can be measured. Government bonds are almost always used as benchmark bonds. Also referred to as "benchmark issue" or "bellwether issue".
  3. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures.
  4. Oil Reserves

    An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.
  5. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
  6. Aggregate Risk

    The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.
Trading Center