New DVP System of CSE

 New DVP System of CSE

DVP stand for Delivery Vs Payment. SEC together with CSE is planning to introduce this to minimize the risk of default in settlement though nothing of such serious issues occurred previously so far. This DVP system is prevailing in all developed markets as well as emerging equity markets and by doing so SEC is planning to upgrade the status of CSE to an emerging equity market thereby attracting more foreign investments to the CSE. Some investors have very confused minds on this new method and some are scared of a blood bath in the market next week. I am advising my viewers that there is nothing negative in this system and will not affect any functionality of current system. Even under the DVP system anyone can buy any stock and sell at any time. The cash payment on the purchases will happen as usual T+3 time frame. Anyone can do day trades. Anyone can use margin trading and anyone can use broker credit as usual. Anyone can claim the dividend as long as they held the stock till XD date. The only change DVP system brings is the shares you have bought will be credited to your portfolio only after T+3 of your purchase where the cash settlement as well as share transfer will happen on the same date. Once you have purchased any share it will show in your portfolio as a "pending buy" stock. For example suppose you have 1000 Sampath bank shares on your portfolio. You buy another 1,000 shares and now your portfolio shows you have 1,000 Sampath bank shares and another 1,000 Sampath bank pending buy shares. Suppose you have sold this 1,000 shares in the same day then your account will not show any pending buy shares of Sampath bank. Alternatively suppose you have sold 500 of these shares the next day then your portfolio will show you have 1,000 Sampath bank shares and 500 pending buy Sampath bank shares. And if you hold these balance 500 Sampath shares till the completion of T+3 days then after T+3 your portfolio will be updated to 1,500 Sampath bank shares. Hope the difference in DVP system is clear to all of you now and you can see that absolutely there is no reason for a blood bath in the market. Thanks

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