Southern Lending Solutions » Payment http://slstechbiz.com Tue, 03 Jan 2012 18:05:43 +0000 en hourly 1 http://wordpress.org/?v=3.1.3 Payment Method: DVP vs Escrow http://slstechbiz.com/2010/03/payment-method-dvp-vs-escrow/ http://slstechbiz.com/2010/03/payment-method-dvp-vs-escrow/#comments Wed, 03 Mar 2010 17:28:17 +0000 admin http://slstechbiz.com/?p=24 Many repo trade programs use third party (usually an attorney) escrow accounts.  In fact, one very reputable one that we would recommend has exactly this policy.  We have heard of many horror stories with escrow though as the securities are transferred in, payment transferred in, then securities transferred out and payment transferred out. That’s alot of moving parts and stories have surfaced of fraudulent activity and crazy things happening in the escrow process.  Also, some of the private equity or hedge funds use escrow so they then can use the escrowed shares to raise the $$ to pay for the loan.  Allowable but not completely desirable.

DVP stands for Delivery versus Payment. Securities transfer out and Payment transfers in. Both by Fed Wire, both instantaneous and very low risk.  It also means the funding entity doesnt need the shares in order to fund it as the $$ must be available beforehand for an instantaneous transfer. Clients like this higher degree of safety.

Stu

Southern Lending Solutions

]]> http://slstechbiz.com/2010/03/payment-method-dvp-vs-escrow/feed/ 0