Free of payment (FOP) - Financial definition
Concise definition of the term free of payment
Free of payment is a settlement method for a securities transaction in which the delivery or reception of the securities is not linked to a corresponding transfer of funds.
Comprehensive definition of the term free of payment
Free of payment in finance denotes transactions where assets are transferred without the need for any monetary exchange. This term is commonly used in securities markets, such as when transferring securities between accounts without involving cash transactions.
Transactions free of payment only usually occur in specific conditions, as they incur a higher level of delivery risk than the generally used delivery-versus-payment transactions, where the delivery of both the funds and the securities happen simultaneously.