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Delivery versus payment or DvP is a common form of principal settlement for securities. The process involves the simultaneous exchange of the securities (or the documents necessary to transfer them) with the agreed cash consideration. If either side fails, the other side does not happen, so the parties have only limited market exposure to each other. Title transfers at the moment of exchange.
confusingly, the CASS rules refer to a "DvP exemption" for a transaction which, as between the client and the broker, is not itself a DVP transaction, but rather an agency arrangement where the broker has agreed to sell into (or buy from) the market, assets that it holds (or will receive) on the client’s behalf, without first becoming the owner of those assets itself. This is, in fact, a very rare circumstance, and it is known to confuse the hell out of compliance officers who assume (naturally) that it applies to DVP trades between client and broker — being the vast majority of all brokerage transactions.
See also