Settlement / Risk Management
DvP and PvP on Blockchain Networks
Delivery versus Payment (DvP) and Payment versus Payment (PvP) on blockchain networks eliminate settlement risk through atomic simultaneous exchange.
Summary
Atomic settlement ensures both sides of a transaction complete simultaneously or neither completes, eliminating one-sided settlement exposure.
What happened
Canton Network and GS DAP implement atomic DvP/PvP where smart contracts execute simultaneous transfer of securities and cash, eliminating Herstatt risk in FX trades.
Business goal
- Eliminate settlement risk through atomic execution
- Reduce counterparty exposure to zero
- Enable instant finality for cross-border transactions
Impact
- Herstatt risk eliminated in currency trades
- Counterparty exposure ends within minutes rather than days
- Lower collateral requirements from reduced risk exposure