Delivery versus payment
A settlement mechanism that delivers securities only if payment is made, and makes payment only if delivery occurs.
Delivery versus payment is a settlement mechanism that links the transfer of securities with the transfer of funds, so that delivery occurs if and only if payment occurs. It removes the risk that one party delivers and the other does not. IFSB-26 applies it to financial market infrastructures handling Islamic instruments such as sukuk, alongside the other international principles for settlement systems.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Settlement finalityThe point at which a transfer becomes irrevocable and unconditional, so it cannot be unwound even if a participant fails.Value dateThe date on which a payment or transfer is due to take effect and funds become available to the receiver.SukukCertificates of equal value representing undivided shares in the ownership of assets, usufruct, services or a project.