VP settlement is managed by VP Securities (VP), which is the central securities depository for all Danish listed securities and certain other securities. In addition to settling transactions and periodic payments, VP handles issuance, custodian services and administration of securities.
The VP settlement system is a multilateral net settlement system that calculates the participants' net positions in securities and cash at fixed times during the day. The securities leg is settled via accounts at VP, while cash is exchanged via accounts at Danmarks Nationalbank.
A core element of the VP settlement system is the simultaneous exchange of securities and cash, known as Delivery versus Payment (DvP). The DvP principle ensures that a party to a securities transaction does not deliver its part of the transaction without receiving the other part. In the VP settlement system, the DvP principle thus contributes to removing the principal risk on settlement of securities transactions.
Participants in VP clearing and settlement are called clearing participants. Participation is open to securities dealers, including banks, mortgage banks and investment firms, and to Danmarks Nationalbank and clearing houses.
In the VP settlement, securities transactions can also be executed in real time outside the fixed settlement cycles. Real-time settlement can take place when one party to a securities transaction needs liquidity or securities immediately.