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KDPW_CCP Clearing House Starts Operations

The establishment of KDPW_CCP is one of the key projects crucial to the development of the Polish market under the KDPW Strategy 2010-2013. The first step towards establishing a CCP clearing house was the creation of the Clearing Guarantor KDPW_CLEARPOOL in May 2010. The company was set up to guarantee the clearing liquidity system with its own capital of PLN 60 million. The capital could be used in extreme cases after the main resources of the KDPW guarantee system have been exhausted.

KDPW_CCP performs the functions of a central counterparty (CCP) clearing house on the Polish market. In order to minimise the risk of default, the clearing house uses a state-of-the-art risk management system based on the internationally recognised SPAN® methodology. In addition, KDPW_CCP has been equipped with PLN 100 million of own capital, which can be used to guarantee the clearing of transactions.
“The transfer of transactions clearing, risk management system and collateral administration functions to the CCP has accomplished the objective of separating functions carrying different risks, which were previously centralised in one institution, KDPW. The relevant regulations of KDPW and KDPW_CCP have been approved by the Polish Financial Supervision Commission (KNF). In the future, the new clearing house will apply for authorisation as a qualified CCP under European regulations,” said KDPW_CCP CEO Iwona Sroka.Functions including the clearing of cash and derivatives transactions concluded on the regulated market and in the alternative trading system as well as projects enabling the clearing of transactions other than concluded in organised trading (e.g., OTC market) have been transferred to the stand-alone clearing house KDPW_CCP. KDPW_CCP is responsible for the clearing of transactions on the WSE Main Market, NewConnect, Catalyst, BondSpot and other markets.
Concurrently with the start of operations of KDPW_CCP, a new clearing guarantee system has been implemented. The new system is comprised of two main tiers: individual margins and marking-to-market, and a solidary clearing fund. The model is complemented by the own capital of the KDPW_CCP clearing house.The change of the structure of contributions to the clearing guarantee fund, effective to the clearing members from its effective date, involves in particular a shift of the main burden from solidary funds to individual margins, which will not be used in case of another member’s default.
Another difference compared to the previously used solutions is the introduction of margins for cash transactions. Previously, margins were only used for derivatives transactions. The profile of the clearing fund will also change.
In addition, the rules of guaranteeing the clearing of transactions concluded on the regulated markets and in alternative trading systems (ATS) have been consolidated. The modifications include mainly the application of uniform tools supporting the clearing of transactions concluded on the regulate market and in ATS.
KDPW remains responsible for functions including the settlement of transactions (operations in depository accounts) and the operation of the central securities depository.
 
KDPW_CCP is the third CCP in the CEE region after the clearing houses in Austria and Hungary. However, KDPW_CCP will serve CEE’s biggest capital market. As measured by the value of trading on the cash market, which will be cleared by KDPW_CCP, Warsaw is a bigger market than Vienna and Budapest combined. In terms of derivatives trading, the Polish market is five times as big. In addition, clearing house services will also be offered to other smaller markets in the region which do not have a central counterparty.
 

 

Last modified: 26-04-2012 Go up