Delivery Versus Payment: How Tokenized Securities Settle

Delivery-versus-payment (DvP) is the settlement principle that a securities transfer and its corresponding funds transfer are linked so that delivery occurs if and only if payment occurs. Neither leg is final unless the other is final. This linkage is the canonical way markets remove principal risk in securities settlement, as set out by the Bank for International Settlements’ Committee on Payment and Settlement Systems (CPSS) definition.

In tokenised markets, the same idea applies. Digital tokens representing assets and cash can settle under DvP rules, often through programmable mechanisms that commit both legs together. Tokenisation enables “atomic” DvP on a single platform, executing trades all-or-none. That can eliminate principal risk while changing liquidity and netting dynamics, as highlighted by the BIS/CPMI’s report to the G20 on tokenisation concepts and implications.

How DvP works in tokenised settlement

Tokenisation represents securities and money as digital tokens on programmable infrastructure. When both legs of a trade reside on the same platform, a single transaction can update the asset balance and the cash balance atomically. The trade either completes in full or not at all, removing principal risk and compressing operational steps. The BIS/CPMI describes this atomic DvP style and notes that it typically increases prefunding needs and can alter netting characteristics compared with traditional batch processes (BIS/CPMI 2024).

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