Payment vs Delivery
Payment vs Delivery (PvD)
The Initiativ Exchange guarantees the execution of all trades through a Payment Versus Delivery (PvD) model.
This mechanism ensures that EUA allowances and corresponding cash settlements are transferred simultaneously, removing counterparty risk. The flow is mediated through a Trust (fiduciary trust structure), which acts as a neutral escrow for both sides of the trade.
Key Guarantees
Simultaneous settlement of assets and cash
Neutral intermediary (Trust) ensures trustless execution
Real-time matching → real-time PvD
No counterparty disclosure: trades are anonymous but verified
Step-by-Step Settlement Flow
The lifecycle of a transaction is illustrated below (see diagram on page 12–13 of the Market Model):
1
Seller transfers EUA quota to Trust
2
Buyer transfers cash to Trust
3
Trading limits are updated (asset side for seller, cash side for buyer)
4
Both sides place matching orders
5
Orders are matched (PvD instruction issued)
6
Limits are adjusted in real-time (asset/cash)
7–8
Positions in the Trust accounts are updated
9–10
Final settlement: assets/cash can be withdrawn to client accounts on request
The Trust: Role & Mechanics
The Trust holds both cash and EUAs in escrow and executes settlement when matching conditions are fulfilled.
Who operates it? The Exchange, as trustee
What does it do?
Holds assets and cash in trust
Updates trading limits and positions in real-time
Transfers cash/EUAs upon member request
Security?
All assets are held in private wallets
EU Registry (CITL) and bank-level controls enforced
Trading Limits and PvD Enforcement
Trading limits are calculated dynamically and enforced before order submission:
For Buyers: Must have sufficient cash (including fees/taxes) pre-deposited in Fiducie
For Sellers: Must have corresponding EUA or EUAA volumes locked
Failure to comply results in:
Order rejection at submission (pre-trade block)
Interest & Remuneration
The Trust may optionally provide interest on:
Cash balances (overnight yield)
EUA holdings (via collateralization or delegation in future)
Terms are to be defined in the Trust agreement.
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