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KDPW_CCP and GPW Facilitate Risk Management by Clearing Members

KDPW_CCP and GPW have opened access to the Risk Management Access (RMA) application for all entities clearing transactions on the exchange. The service facilitates risk management and improves the safety of trade in financial instruments on GPW.

Risk Management Access (RMA), a solution developed and implemented by GPW and KDPW_CCP, is available to market participants since mid-August 2015. With the RMA application, each Clearing Member and broker providing clearing services can directly define maximum limits on the value of orders placed by an Exchange Member whose trade it clears. On-going definition of such parameters ensures improvement of effective risk management.

In addition to the filter configuration functionality, the RMA application also features the Kill Switch functionality where placement of orders by an Exchange Member can be blocked and its existing orders on the order book can be cancelled. The solution is based on the Direct Market Access functionality of the trading system UTP.

“Today when algorithmic trading is ubiquitous, controls of orders and trades of Exchange Members by their Clearing Members are key to the stability of the market and consequently to the safety of trade in financial instruments,” said Dariusz Kułakowski, Vice President of GPW.

“The implementation of the Risk Management Access application largely expands and supplements the risk management system offered by KDPW_CCP. In our opinion, the new tool can boost turnover in the market by opening Clearing Members to new types of investment strategies,” said Iwona Sroka, President & CEO of KDPW_CCP.

GPW pursues with determination its strategy which among others provides for safety of trade at the highest standard based on world-class technology. The new service improves the safety of trading and follows the practice of many global markets where such solutions are increasingly popular.

The main function of the clearing house KDPW_CCP is to systemically manage clearing risk under the highest global market standards. In risk management, KDPW_CCP applies the SPAN methodology in the cash market and the Value at Risk methodology in the OTC market. The clearing house uses a range of mechanisms which ensure the safety of clearing including capital and formal requirements for Clearing Members, margins (in the cash and derivative markets), the clearing fund, as well as own resources of the clearing house at PLN 228 million. The Polish Financial Supervision Authority (KNF) authorised KDPW_CCP in 2014 as a clearing house which complies with all requirements for clearing houses under the EU Regulation EMIR. The Polish clearing house was the third one in the European Union to be so authorised.

Last modified: 20-08-2015 Go up