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).

BREAKING DOWN '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. Security

    A financial instrument that represents an ownership position ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with ...
  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 Versus Payment - DVP

    A securities industry settlement procedure in which the buyer's ...
  6. Delivery Date

    1. The final date by which the underlying commodity for a futures ...
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. Professionals

    Buy-Side vs Sell-Side Analysts

    Both sell-side and buy-side analysts on Wall Street spend much of their day researching companies in a relentless effort to pick the winners.
  3. Investing Basics

    Financial Markets: Capital vs. Money Markets

    Financial instruments with high liquidity and short maturities trade in money markets. Long-term assets trade in the capital markets.
  4. Economics

    Understanding the American Dream

    The American dream is the belief that anyone, regardless of where they’re born or into what class, can attain their own version of success.
  5. Term

    What High Net Worth Means

    A high net worth individual is someone with many liquid financial assets.
  6. Markets

    The Biggest M&A Deals of 2015

    Here is a summary of 2015 M&A activity and a look ahead at 2016.
  7. Stock Analysis

    5 Popular Stocks with Short Squeeze Potential (FIT, GME)

    A short squeeze can lead to big gains and make your year (if the risks aren't too great). Here are five stocks with short squeeze potential.
  8. Investing Basics

    What's an Electronic Communications Network?

    An electronic communications network connects buyers and sellers so they can directly trade stocks, currencies and other financial instruments.
  9. Term

    What Is a Bogey?

    A bogey is a performance benchmark to which a fund or investment manager is compared.
  10. Personal Finance

    The U.S. Ranks 14th In Financial Literacy

    While the U.S. is the wealthiest country on the planet, the average American doesn't know much about basic financial matters.
RELATED FAQS
  1. What is the expense ratio in the insurance industry?

    The expense ratio in the insurance industry is a measure of profitability calculated by dividing the expenses associated ... Read Full Answer >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. 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 >>
Hot Definitions
  1. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  4. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  5. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
Trading Center