FIN.15:5.4 - Settlement protection and timely delivery remain separate

A constructed exchange requires paying 90 home units to receive 100 foreign units needed for a supplier. Under an available payment-versus-payment service, final transfers occur together only when both legs satisfy the service’s conditions. Treasury has 110 home units; the service blocks 90 for prefunding, leaving 20 available for other use. Those blocked funds cannot finance another instruction while the hold remains.

If the counterparty fails to fund in time, the conditional exchange has not supplied the 100 foreign units. The service prevents the stipulated one-sided final transfer, but the supplier still needs payment and the availability of the held 90 follows the actual release terms. FIN.2 and the responsible decision owner must consider any attainable interim currency or changed deadline.

Under a different gross route, paying 90 irrevocably before final receipt leaves that principal exposed during the interval. A trade confirmation agreeing to exchange does not end the exposure. This route therefore has a materially different risk and can require a different approval or financial comparison even if the exchange price is identical.