KDPW_CCP is a CCP (central counterparty) within the meaning of the Regulation of the European Parliament and of the Council (EU) No 648/2012 of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, and clears transactions in cash instruments and derivatives in organised and OTC trade (EMIR). Under the KDPW_CCP rules (the Rules of Transaction Clearing (organised trading) and the Rules of Transaction Clearing (non-organised trading)), KDPW_CCP becomes a counterparty of each transaction accepted for clearing. This is done through novation, introduced by the Act on Trading in Financial Instruments of 29 July 2005 (as amended) whereby the original legal relation between the seller and the buyer is irrevocably interrupted at the moment of acceptance of the transaction for clearing while KDPW_CCP becomes the buyer for the selling member and the seller for the member who buys the financial instrument in the transaction submitted for clearing.
As of 8 April 2014
KDPW_CCP S.A. operates under an authorisation for the provision of clearing services as a CCP, referred to in Article 14(1) of EMIR, granted by the Polish Financial Supervision Authority (PFSA) and as of that date, KDPW_CCP S.A. offers clearing services under, respectively, the Rules of Transaction Clearing (Organised Trading) and the Rules of Transaction Clearing (non-organised Trading) according to the authorisation and for the classes of instruments specified therein.
The Polish Financial Supervision Authority decision of 8 April 2014
- authorisation for the provision of clearing services as a CCP
On 9 August 2016
, the Polish Financial Supervision Authority has extended the authorisation of KDPW_CCP to new classes of instruments. The scope of KDPW_CCP services was extended to the celraing of instruments in organised trading (traded on the exchange and in alternative trading systems) and OTC instruments (interbank market) denominated in EUR as well as OTC debt instruments in PLN. PFSA’s decision authorises KDPW_CCP to clear new instruments:
- EUR-denominated interest rate derivatives in non-organised trading (FRA, IRS, OIS, Basis Swap);
- EUR-denominated debt and equity instruments in organised trading;
- PLN-denominated debt instruments in non-organised trading.
The extended authorisation of the clearing house allows it to accept collateral in EUR, including both cash and bonds.
The Polish Financial Supervision Authority decision of 9 August 2016
- extending the scope of the authorisation for the provision of clearing services as a CCP
KDPW_CCP is a modern clearing house and clears transactions using a range of mechanisms which reduce the risk of counterparty default on a systemic basis. Thanks to its tools including securities netting, the clearing guarantee system, securities lending system (the loan return guarantor), KDPW_CCP is ready to compete effectively with European clearing houses. The standardised solutions used by the KDPW_CCP clearing house support dynamic development of the scope and areas of provided services.
Important features of a clearing house:
Separate legal entity
In line with international standards, as risks of a CCP clearing house are different than risks of the core business of a central securities depository (KDPW), it was necessary to establish a separate legal entity to provide clearing house services: KDPW_CCP.
Guaranteeing the clearing of transactions
KDPW_CCP is equipped with capital, which can be used in the clearing guarantee system, thus reinforcing the safety of clearing. The share capital of KDPW_CCP is PLN 190 million. Under the requirements of EMIR, the Company’s special reserve resources are PLN 13.1 million.
If necessary to cover any losses arising from a clearing member’s default, special resources will be used after margins deposited by the defaulting clearing member and the member’s contribution to the default fund.
Capped additional contributions of members to the clearing fund
The creation of KDPW_CCP allows to cap maximum additional contributions to the clearing fund at 50% of the member’s basic contribution. The cap allows members to assess the risks of participation in the clearing guarantee system.