Delivery versus payment (DvP)

Why tokenise? i

When a bond or share is bought today, the security and the cash usually change hands one or two business days later, through a chain of brokers, custodians and a central securities depository. On a shared ledger both can move together in one step, within seconds or minutes, so neither side is left waiting or exposed. It is the most common use case in the register, but most live examples are still one-off bond issues rather than everyday trading.

Improves an existing process Delivery versus payment (DvP: the security moves only if the cash does) is already the rule in today's markets, enforced by central securities depositories (CSDs, the institutions that keep the official record of who owns which securities). Tokenisation does not invent DvP. It makes the two legs one transaction on one ledger (atomic settlement) and allows it to happen straight after the trade instead of a day or two later.

The problem today

• Trading and settlement are separate steps handled by different firms. Brokers agree the trade, custodians hold and settle the securities, and CSDs keep the final record, with identity checks and reconciliation adding friction along the way.^[1]
• Between trade and settlement each side is exposed to the other failing, and to having to replace the trade at a worse price. In many markets that window lasts up to two business days.^[1]
• The EU still settles most trades on venues two business days after the trade (T+2). It moves to T+1 on 11 October 2027, a change that will reshape operations across depositories, clearing houses and intermediaries. Repo and securities lending stay outside the new rule.EU switch from T+2 to T+1 on 11 October 2027 (Regulation (EU) 2025/2075)^[2]
• Some trades still fail to settle on the intended day, even in markets that have already moved to T+1, and each fail has to be chased by hand.About 2.1% of NSCC net settlement and 3.3% of other DTC settlement failed on average in July 2024, after the US T+1 move, much as under T+2^[3]
• The money tied up as a safety margin while trades are pending is large, which is why shortening the cycle matters.The US clearing fund fell by about $3 billion (23%) on average after the move from T+2 to T+1^[3]

Today vs tokenised (simplified)

End to end: 1 to 2 business days (T+1 in the US; T+2 in the EU until 11 October 2027) → seconds to minutes once both legs are on the ledger · Many live tokenised bonds still choose a same-day or next-day settlement date, so the full speed gain is not always used.

Benefits · 6, of which 1 evidenced

Who it suits

Bank, Broker-dealer or market maker, Specialist digital asset custodian, Market infrastructure (FMI), Central bank, Asset manager · effort: high · value depends on counterparties joining

• Securities issued or held in tokenised form, directly or through a depository link
• Access to a settlement asset on the same ledger, or a link to the payment system
• Operational and legal set-up to use a DLT market infrastructure, such as the EU DLT Pilot Regime or Swiss DLT law

Limits and open questions

• Atomic settlement worked in the Eurosystem trials but needed considerable expertise, and where money and securities sat on separate ledgers they could not always be kept in step, sometimes needing manual fallback steps.^[8]
• Legal rules for DLT securities differ across Europe and the framework is still at an early stage.^[8]
• Payments made in stablecoins are a claim on a private issuer and can trade away from par, unlike settlement in central bank money, so the choice of cash leg matters for safety.^[1]
• Separate ledgers each keep their own record, so linking them does not easily stop liquidity splitting across platforms.^[1]
• Settling every trade on its own and at once needs more cash up front than today's netted systems, which offset many trades before settling.^[1]