Delivery Versus Payment (DVP) on CSE!

godswen · 1 Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 2:48 pm

godswen

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Did yall see the new announcement! So it's gonna be; you pay first then you get the shares! Twisted Evil

So no more day trading?

http://www.cse.lk/cmt/upload_cse_announcements/7821317101794_.pdf

bakapandithaya · 2 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 3:21 pm

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This is good improvement, poor retailers can't buy on credit. So, no credit clearance

innam · 3 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 3:27 pm

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@godswen wrote:Did yall see the new announcement! So it's gonna be; you pay first then you get the shares!

So no more day trading?

http://www.cse.lk/cmt/upload_cse_announcements/7821317101794_.pdf

Actually day trading can still take place but you may need to have a margin account or a credit balance in your account in order to make payment for the buy side of the transaction, once you make the sale the proceeds will net off the margin/credit to your account.
That is the theory but the CSE/SEC has a tendency to muck things up when it comes to practise.

godswen · 4 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 3:36 pm

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@innam wrote:
Actually day trading can still take place but you may need to have a margin account or a credit balance in your account in order to make payment for the buy side of the transaction, once you make the sale the proceeds will net off the margin/credit to your account.
That is the theory but the CSE/SEC has a tendency to muck things up when it comes to practise.

And do we really need DVP here in CSE?

Slstock · 5 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 3:38 pm

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"Payment at the moment of delivery".[1] Delivery versus payment or DVP is a sale transaction of negotiable securities (in exchange for cash payment) that can be instructed to a settlement agent using SWIFT Message Type MT 543 (in the ISO15022 standard). Use of such standard message types is intended to reduce risk in the settlement of a financial transaction, and enable automatic processing. Ideally, title to an asset and payment are exchanged simultaneously. This may be possible in many cases such as in a central depository system such as the United States Depository Trust Corporation

http://en.wikipedia.org/wiki/Delivery_versus_payment

It does not mean that Broker Credit ( ateast for T+3) needs be abolished. If it does that means

i) first you need to put money into your account before buying
or
ii) need to have account balance after selling

I am not sure whether it is necessary or feasible to make it that strict. Retailer Day trading can reduce immensely then. Day Trading is also necessarily for market sustenance.

Interpreting from the article above, with DVP it seems that your broker can pay for you also ( with T+3). Maybe it does not have to be strict as above. Idea of DVP appears to be for a better management system.

Let see how they are going to implement this and not mess CSE again with too drastic measures all of sudden. But If implemented rationally with limited flexibility this might be actually curb manipulators somewhat.

ps : Okay I just saw Innam response. Margin account can also fit within the system. But how many retailer have margin accounts?

Last edited by slstock on Tue Sep 27, 2011 3:44 pm; edited 1 time in total

innam · 6 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 3:40 pm

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@godswen wrote:
And do we really need DVP here in CSE?

if you want a market of investors, DVP (IF implemented properly) can be a good thing.

if you want a market of manipulators/pump & dumps, DVP is a bad thing.

zen · 7 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 4:33 pm

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Gyuz I don't understand.. What's the difference between this and the current system? When I buy shares, my 'cash available for withdrawl' goes down and the 'portfoilo value' goes up. When I sell, it happens vise versa. What's the difference?

roshanalv · 8 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 4:45 pm

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Introduce on mid 2012, so not to worry now

seyon · 9 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 4:49 pm

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@zen wrote:Gyuz I don't understand.. What's the difference between this and the current system? When I buy shares, my 'cash available for withdrawl' goes down and the 'portfoilo value' goes up. When I sell, it happens vise versa. What's the difference?

What i understand ,this system way of controlling the risk in securities mkt. simply DVPS means changes of ownership of particular share is transferred while the payments is made. Eg. If u purchase 1000 JKH @ Rs.300, You have to settle 300,000, till the payment is made ( within stipulated time period eg: T+3), the purchased qty will not credit ur CDS A/c and sametime will not debit counterparties CDS A/c. till that 1000 JKH will show as shadow balance. If u failure to settle the payment, this particular trade will be canceled.

In short if u have money only u can make trade.

Related Discussion

http://forum.srilankaequity.com/t5305-how-dvps-delivery-versus-payment-system-will-benefit-to-cse

zen · 10 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 5:50 pm

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So it only affects people who use margin? If that's the case, it's good. It makes the market more predictable, trends will not be interrpupted and we won't have face times like these.

But what happens to a guy who sell to a person who isn't paying on the spot. A sale happens but it could be cancelled???

jks · 11 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 8:58 pm

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If u failure to settle the payment, this particular trade will be canceled.

this is really happen we never loss if shares price goes down payment made to stock broker not paid transaction cancelled.we win seller goes bankrupt.

seyon · 12 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 9:59 pm

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@zen wrote:So it only affects people who use margin? If that's the case, it's good. It makes the market more predictable, trends will not be interrpupted and we won't have face times like these.

But what happens to a guy who sell to a person who isn't paying on the spot. A sale happens but it could be cancelled???

This system will badly affect the manipulators and the traders like NP & DJ, At present these guys can place the orders even if they don't have sufficient fund or margin, these guys might have some arrangement with the brokers. But after introduction of DVPS, the system will allow even to place the orders if u have a fund or margin. Yes that is way the system is designed.

Now u can see ur CDS a/c and ur account ( broker calls as back office) are not linked. But in DVPS Security transfer system ( CDS a/c) and fund transfer a/c ( ur a/c) will be linked. So when u placing the order or buying, system will identify whether u have suffciant fund ( basically our online trading and buying power )

However this system will differ from country to country, in some place system will allow u to buy, once u make the payment (T+3) stock will transfer to ur CDS a/c, until it will show as shadow balance, if u are default to pay, then the particular transaction will be canceled.

will see How CSE is going to introduce this system. I am very much happy about this system..

chamith · 13 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 11:21 pm

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This is how it take place in LSE.
You have to have money in your a/c to buy.

So the payment is secure.
In the positive side i believe this would somewhat bring an end to force selling. As long as force selling is there, its hard for a market to stand up.

sajeethk · 14 Re: Delivery Versus Payment (DVP) on CSE! Wed Sep 28, 2011 6:57 am

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May be some of CSE head peoples want have free tour to India coming months using CSE money. cos since trading volume go out they have good money.....

Hope end of the day will not come with nothing....

Kaish86 · 15 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 1:00 pm

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DVR again. If i sell something at profit, and on 3rd day during settlement if the share price is not favouring buyers earlier decision and he refuses to settle will the original trade us cancelled. How the seller get his money for his original decision. This is unfair.
Current system either buyer pay or not seller is guaranteed of cash since broker has to pay on his own account. Is DVR is simply transferring settlement risk of the broker to the seller.

Can anyone explain on my 1st paragraph

Kaish86 · 16 DVP Wed Jun 23, 2021 1:03 pm

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If i sell something at profit, and on 3rd day during settlement if the share price is not favouring buyer's earlier decision and he refuses to settle, will the original trade is cancelled. Can't seller get his money for his original decision. This is unfair.

As per Current system either buyer pay or not, seller is guaranteed of cash since broker has to pay on his own account. Is DVP is simply transferring settlement risk of the broker to the seller.

Can anyone explain on my 1st paragraph

samaritan · 17 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 3:41 pm

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@Kaish86 wrote:If i sell something at profit, and on 3rd day during settlement if the share price is not favouring buyer's earlier decision and he refuses to settle, will the original trade is cancelled. Can't seller get his money for his original decision. This is unfair.

As per Current system either buyer pay or not, seller is guaranteed of cash since broker has to pay on his own account. Is DVP is simply transferring settlement risk of the broker to the seller.

Can anyone explain on my 1st paragraph

A question may be raised due to fear, uncertainty & doubt. Similarly, same question may be raised to create fear, uncertainty & doubt. One should have the wisdom to know the difference, given the fact that this same question has been posted under three different threads. Delivery Versus Payment (DVP) on CSE! Icon_lol

Kaish86 · 18 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 3:59 pm

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I posted in 3 forum bcz i wanted to know the answer atleast in one of the 3 forums. Since i didn't get answers for my previous posts in other subjects.
Its a very straightforward question that who will pay me when the buyer (who does not have margin facility) not settles on 3rd day. If you know the answer pls provide without saying go and see YouTube, as you replied in the another forum.

For your information, im not a big fish to collect shares by creating panic in the market. Anyway thanks atleast you provided some feedback.
Any other member who can clear my doubt.

samaritan · 19 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 5:41 pm

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@Kaish86 wrote:If i sell something at profit, and on 3rd day during settlement if the share price is not favouring buyer's earlier decision and he refuses to settle, will the original trade is cancelled. Can't seller get his money for his original decision. This is unfair.

As per Current system either buyer pay or not, seller is guaranteed of cash since broker has to pay on his own account. Is DVP is simply transferring settlement risk of the broker to the seller.

Can anyone explain on my 1st paragraph

The buyer cannot retract and hence the trade will not be cancelled. The buyer's broker is bound to sort out any issues that may arise from the trade with the buyer. You will get your payment. Any comments from others?

niru · 20 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 6:56 pm

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Trade can be cancelled.

No security movement from seller's account.

But, Seller will be compensated for the 3 day price loss and opportunity loss.

CDS will charge this compensation from buy broker, buy broker may charge it from buyer.

Compensation amount = qty x Max(0,P) + 0.8% of transaction value

P = sale price - highest trade price between trade date settlement date

xhunter · 21 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 7:11 pm

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@niru wrote:Trade can be cancelled.

But, Seller will be compensated for the 3 day price loss and opportunity loss.

CDS will charge this compensation from buy broker, buy broker may charge it from buyer.

Compensation amount = qty x Max(0,P) + 0.8% of transaction value

P = sale price - highest trade price between trade date settlement date

probably this might be only applicable for pre arranged transaction.
anyway
P = sale price - highest trade price between trade date settlement date
is also probably incorrect.
at least it should be the lowest price recorded in between those two days.

where we can find these information from?

it is fair to consider
p = highest price recorded - lowest price recorded
theoretically seller could have sold them for the highest price , but now he/she might be selling for the lowest price , so the opportunity cost can be that much of amount.

samaritan · 22 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 8:45 pm

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There is a link below, where reference is made about buyer's settlement bank as well.

https://www.cse.lk/pages/dvp-video/dvp-video.component.html

niru · 23 Re: Delivery Versus Payment (DVP) on CSE! Thu Jun 24, 2021 10:56 am

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@niru wrote:Trade can be cancelled.

No security movement from seller's account.

But, Seller will be compensated for the 3 day price loss and opportunity loss.

CDS will charge this compensation from buy broker, buy broker may charge it from buyer.

Compensation amount = qty x Max(0,P) + 0.8% of transaction value

P = sale price - highest trade price between trade date settlement date

Sorry, P should be as follows

P = sale price - Lowest trade price between trade date settlement date

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Delivery Versus Payment (DVP) on CSE!

1 Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 2:48 pm

godswen

2 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 3:21 pm

bakapandithaya

3 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 3:27 pm

innam

4 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 3:36 pm

godswen

5 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 3:38 pm

Slstock

6 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 3:40 pm

innam

7 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 4:33 pm

zen

8 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 4:45 pm

roshanalv

9 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 4:49 pm

seyon

10 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 5:50 pm

zen

11 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 8:58 pm

jks

12 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 9:59 pm

seyon

13 Re: Delivery Versus Payment (DVP) on CSE! Tue Sep 27, 2011 11:21 pm

chamith

14 Re: Delivery Versus Payment (DVP) on CSE! Wed Sep 28, 2011 6:57 am

sajeethk

15 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 1:00 pm

Kaish86

16 DVP Wed Jun 23, 2021 1:03 pm

Kaish86

17 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 3:41 pm

samaritan

18 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 3:59 pm

Kaish86

19 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 5:41 pm

samaritan

20 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 6:56 pm

niru

21 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 7:11 pm

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22 Re: Delivery Versus Payment (DVP) on CSE! Wed Jun 23, 2021 8:45 pm

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23 Re: Delivery Versus Payment (DVP) on CSE! Thu Jun 24, 2021 10:56 am

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24 Re: Delivery Versus Payment (DVP) on CSE!

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