Formal requirements for entities seeking participation in KDPW_CCP
An entity which is seeking participation in KDPW_CCP should submit an application (Form 1), which should contain the following:
- the type of activities the applicant intends to perform within the clearing system and the type(s) of participation status, relevant to the activities which the applicant intends to perform, according to the classification defined in § 11.1-3 of the Clearing Rules.
Note: For participation status type:
- Representative - specify, respectively, the participant or the entity that is not a participant, for whom the applicant intends to perform activities within this scope;
- Clearing Member – derivatives accounts – specify the entities which conclude transactions in derivatives for which the applicant is seeking Clearing Member status;
- Non-clearing Member - specify the entity or entities which will perform Representative functions for the applicant;
According to § 20 of the Clearing Rules, the following documents should be attached to the application:
- declaration to the effect that the applicant fulfils the financial conditions set out in § 23.2 of the Clearing Rules and is familiar with the terms and conditions of sending and receiving information and declarations in electronic form binding in relations between KDPW_CCP and members, as posted on the KDPW_CCP website, and is familiar with the conditions to be fulfilled by members according to § 23.3 of the Clearing Rules, if the applicant is seeking participation with the Clearing Member status;
- type of transactions for which the applicant is seeking participation and the market of such transactions.
- a copy of the company statute or articles of association and a valid copy or excerpts from the relevant company register;
- a copy of the brokerage licence or licence to conduct other activities related to trading or registration of financial instruments, if such licence is required by separate legal regulations. For a foreign investment company conducting brokerage activities on the territory of the Republic of Poland, an additional declaration should be attached, showing that conditions have arisen to allow it to begin performing brokerage activities in the territory of the Republic of Poland, defined in Article 117(3), second sentence, of the Act on Trading in Financial Instruments (hereinafter “Act”), or a document from the Polish Financial Supervision Authority (KNF), confirming that the Authority has received from the appropriate foreign supervisory body a notification on the intention to begin performing brokerage activities in the Republic of Poland, indicating the date when this notification was received;
- cards with specimen signatures of the applicant’s authorised representatives, as well as copies of power-of-attorney documents in instances where the right to represent the applicant by those persons submitting a specimen signature on the specimen signature card does not derive from the registration documents (Form 3);
- a declaration giving consent to arbitration by the Arbitration Court at the National Depository (Form 4).
If the application is for a participation status type related to the Clearing Member status, the applicant should attach, in addition to the documents listed above, also the following documents:
- an information card containing addresses for deliveries as well as a list of staff employed in posts involving financial instruments trading-related activities, that includes their positions, telephone/facsimile numbers as well as e-mail addresses (Form 5);
- a declaration indicating the applicant’s identifier in the relevant settlement institution or indicating the entity which will perform the functions of the applicant’s settlement agent and the agent’s identifier in the relevant settlement institution (Form 7);
- a declaration indicating the number of the applicant’s bank account in the relevant settlement bank in the currency in which the applicant will participate in the clearing of transactions operated by KDPW_CCP or indicating an entity which will perform the functions of the applicant’s payer (Form 6, 6 a, 6 b);
- declarations of the entities indicated by the applicant according to points 6 or 7, which will perform the functions of settlement agent or payer, whereby they accept to perform such functions for the applicant (Form 8, 9, 10).
An applicant which is a foreign investment firm or another foreign financial institution seeking Clearing Member status should also attach to the participation application a written statement indicating the types of reports and other financial information referred to in § 28.2(2)-(3) of the Clearing Rules as well as the deadlines of their submission.
According to § 15 of the Clearing Rules, depending on the type of activities performed by a participant, the type of transactions for which the Clearing Member status is held, and the market of such transactions (Forms 8 – 11), before a participant or an entity represented by a participant in clearing starts to conclude transactions of the given type on the given market, the participant who has been granted Clearing Member status should:
- make a payment to the clearing fund;
- submit a written statement of joining the relevant alternative trading system’s guarantee fund, and make a payment to such fund;
- make an initial margin deposit referred to in § 49.3 of the Clearing Rules;
- deliver the power-of-attorney document to KDPW_CCP, containing the authorisation necessary to close the participant’s derivatives positions for which the participant holds Clearing Member status, in instances specified in the Clearing Rules;
- deliver the power-of-attorney document to KDPW_CCP, containing the authorisation necessary to make securities purchase and sale orders on the participant’s account to the extent necessary to perform obligations arising from the clearing of transactions for which the participant holds Clearing Member status.
The powers of attorney referred to in points 12 and 13 should contain the participant’s statement waiving the participant’s right to revoke them or to change their scope, which is necessary to enable KDPW_CCP to exercise its rights set out in the Clearing Rules. The powers of attorney will expire upon the termination of the participation of the mandator, at least to the extent of the mandator’s Clearing Member status.
According to § 18 of the Clearing Rules, the participation agreement is concluded two weeks after the submission of the relevant application together with all required attachments to KDPW_CCP if the entity submitting the application fulfils the participation requirements specified by the law and by the Clearing Rules, and the application and the attached documents meet the formal requirements specified in the Clearing Rules.
In addition, please note the following conditions:
- the application and the attached documents require the delivery of the original document or an appropriately certified copy pursuant to § 4.3 of the Clearing Rules and, in addition, documents referred to in points 1 and 2 which have been drawn up abroad should be legally authorised according to § 3 of the KDPW_CCP Detailed Rules of Clearing;
- according to § 2 of the KDPW_CCP Detailed Rules of Clearing, the documents attached to the application referred to in points 1 and 2, as well as the powers of attorney delivered by participants or by entities applying for a participation agreement, which have been drawn up in a foreign language, should be submitted in Polish translation, written and endorsed by a certified translator. Other documents including the application should be submitted in Polish;
- participants holding Clearing Member status are obliged at least once every calendar year to take part in tests of the Business Continuity System organised by KDPW_CCP, according to § 32 of the Clearing Rules.
Entities eligible to obtain KDPW_CCP Clearing Member status:
A participant holding Clearing Member status is required to hold a bank account in the relevant clearing bank in the currency of the planned clearing of transactions operated by KDPW_CCP or a payer holding such an account in the clearing bank.
- an entity which has signed a participation agreement with the National Depository for Securities and holds a depository account or securities account for the settlement of transactions covered by the status;
- an entity which holds no depository account or security account operated by KDPW but has signed a KDPW representation agreement with a settlement agent, which will settle transactions concluded by that entity.
A foreign investment firm with a registered office outside the territory of Poland may obtain KDPW_CCP Clearing Member status and clear transactions in securities conditional on signing a representation agreement with a settlement agent (§ 3.13 of the Clearing Rules).
In order to process cash flows from the settlement of transactions, a foreign investment firm is required to sign an agreement with a payer bank which holds an account in the clearing bank. The settlement agent or another KDPW direct participant can perform the payer function. However, the payer function must be performed by the same entity for the foreign investment firm and for the settlement agent.
|The capital requirements for participants holding KDPW_CCP clearing member status are set out in § 24 of the KDPW_CCP Clearing Rules as follows:
|Participation status type
||Minimum capital requirements
|GUR (General Clearing Member)
|PLN 50 million plus a multiple of PLN 5 million per entity represented in KDPW_CCP >
||PLN 15 million plus a multiple of PLN 2 million per entity represented in KDPW_CCP
|BUR (Direct Clearing Member)
||PLN 25 million
||PLN 4 million
Initial contributions to the clearing guarantee system
A participant holding Clearing Member status is required to make an initial contribution to the basic resources of the fund depending on the market:
- The initial contribution equals five times the minimum contribution as set out in § 8 of the Clearing Fund Rules at PLN 100,000. A participant’s contribution to the clearing fund may comprise cash and Treasury securities. Treasury securities contributed to the clearing fund are recognised up to 90% of the adjusted contribution amount.
- In addition, a participant holding Clearing Member status for transactions in derivatives posts an initial clearing margin of PLN 100,000 according to Resolution No. 11 of the KDPW_CCP Management Board dated 14 June 2011. Securities and bank guarantees are recognised up to 100% of the initial clearing margin amount.
ALTERNATIVE TRADING SYSTEM (ATS)
The initial contribution equals five times the minimum contribution as set out in § 8.2 of the Rules of the Fund Guaranteeing the Clearing of Transactions Concluded in the Alternative Trading System Organised by the Warsaw Stock Exchange or Bondspot S.A. at PLN 20,000. A participant’s contribution to the ATS guarantee fund may comprise cash and Treasury securities. Treasury securities contributed to the ATS guarantee fund are recognised up to 90% of the adjusted contribution amount.
Material and technical requirements
Information and declarations in electronic form are transferred between KDPW_CCP S.A. and KDPW_CCP participants via the National Depository (KDPW) on the terms of agreements signed between the National Depository and participants whereby they accept the full effect of declarations submitted and information communicated in electronic form. This form of communication with KDPW_CCP is activated once the KDPW_CCP participant has signed the relevant agreement with the National Depository. According to § 4.1 of the Clearing Rules, information or declarations to be transferred in electronic form should comply with a specific format or structure as presented on the KDPW_CCP website.
Financial and reporting requirements
A participant holding Clearing Member status is required to regularly report to KDPW_CCP S.A. with financial information set out in § 28 – 30 of the Clearing Rules and, according to § 27, to calculate on a daily basis the indicators related to precautionary norms under the provisions of applicable regulations referred to in § 26. In case the precautionary norms set under the Clearing Rules are exceeded, the participant is required to report in writing to KDPW_CCP within two days, indicating the reasons for the situation and the steps taken to eliminate it.