What Is the Concept of “Settlement Finality” and Why Is It Critical for DVP?

Settlement finality refers to the point in time when an executed transfer of funds or assets becomes irrevocable and unconditional. Once finality is reached, the transaction cannot be reversed or unwound, even in the event of a counterparty's subsequent bankruptcy.

It is critical for DVP because the mechanism relies on the certainty that both the delivery and the payment are final and simultaneous. Without finality, the principal risk DVP aims to eliminate could still exist.