Year 2011 at KDPW and KDPW_CCP
The creation of the clearing house KDPW_CCP is the highlight of the past year at the National Depository. As a result, the Polish market complies with global standards of clearing houses and central securities depositories. The challenge of 2012 is to implement interbank OTC derivatives clearing.
Many projects key to the development of the Polish capital market and to the National Depository have been implemented in 2011. The clearing house KDPW_CCP has been set up based on top international standards. The National Depository has opened its 17th operational link with the Slovenian market. The migration of euro settlement to the pan-European platform TARGET2 has been completed. The number of accounts operated by KDPW Participants has crossed a record-high 1.5 million.
The most important event was the separation of the clearing house KDPW_CCP from the structure of the National Depository. On 1 July 2011, KDPW_CCP took over from KDPW all functions of clearing transactions concluded on the regulated market and in the alternative trading system including guaranteeing the clearing of transactions on the basis of a multi-tier risk management system. “The creation of KDPW_CCP has made a positive impact on the international position of the Polish capital market and has been welcomed by rating agencies, especially owing to reduced counterparty risk. The implemented modifications have been strongly supported by the Polish financial market infrastructure community,” said KDPW President and CEO Iwona Sroka.
The National Depository has successfully migrated euro settlement to TARGET2. The migration was completed on 21 November 2011. First operations have already been performed on the TARGET2 platform. The dividend of the Estonian company OLYMPIC ENTERTAINMENT GROUP totalling EUR 35,671.68 was paid on 21 November. TARGET2 is a system developed on the basis of a Single Shared Platform (SSP), where all payment orders are matched and processed under the same technical rules and payments are made.
New Link: Slovenia
In 2011, the National Depository for Securities has opened a new operational link with Slovenia. As a result, Slovenian companies can be listed on the Warsaw Stock Exchange. It is the 17th operational link of the Polish CSD with a foreign counterpart. One Slovenian company, NKB, is already listed on the WSE.
Number of Accounts
The number of securities accounts has for the first time crossed the mark of 1.5 million in 2011. Nearly 60 thousand new accounts have been opened in 2011. According to a survey conducted by the European Central Securities Depositories Association (ECSDA) on request of KDPW, Poland is the CEE market with the most active individual investor community. “As measured by the number of securities accounts on the surveyed markets, Poland is the regional leader. The number of accounts in Lithuania, Latvia or Estonia is under 500 thousand,” said KDPW President and CEO Iwona Sroka. “By comparison, there are over 1.5 million accounts on the Polish market,” said Ms Sroka.
Award for kdpw_flow
The asset management system kdpw_flow developed by the National Depository has been awarded in the first edition of the Chief Innovation Officer of the Year competition opened by PwC and the monthly Forbes. The solution kdpw_flow has improved the liquidity of the National Depository and allowed it to launch new services. “The system introduces elements of automation of asset management stages including division of investment gains among fund members. It has allowed us to identify and mitigate investment risk,” said KDPW Deputy President Sławomir Panasiuk.
Plans for 2012
KDPW_CCP is engaged in an intensive project aiming to start the clearing of OTC derivatives in 2012. For that purpose, together with the Banking Experts Team, KDPW_CCP has developed an OTC derivatives clearing model. “Our biggest project next year is to start clearing selected OTC derivatives trades. The main benefit of the project is to release credit limits which banks impose on their counterparties. This in turn may improve liquidity on the interbank market, which is so much needed these days,” said KDPW President and CEO Iwona Sroka.
The National Depository is finalising work on an application which will allow issuers of securities to exchange corporate actions information over a website. The modifications will be implemented in Q1 2012. “Information on upcoming payments of benefits required under applicable regulations, which issuers previously provided to the National Depository in paper form, will now be entered by issuers solely via the internet application,” said KDPW President and CEO Iwona Sroka.
Other active projects crucial to the Polish market include continued work on modifications to the Compensation Scheme, creation of a securities loans platform, and implementation of the hold-release mechanism necessary to steer the sending of instructions for clearing according to international recommendations in order to reduce the cost of settlement.