NASDAQ OMX will supply KDPW_CCP with an OTC clearing and risk management module. The companies signed a formal agreement on 3 February 2012. Under the contract NASDAQ OMX will supply KDPW_CCP with its Sentinel Risk Manager product in order to support trade lifecycle and risk management requirements for clearing of OTC traded instruments. The clearing house KDPW_CCP is currently working to develop an OTC derivatives and repo clearing service. According to the work timetable, the service will be available as of the beginning of 2013.
KDPW_CCP acting in co-operation with the leading Polish banks is developing an OTC derivatives clearing and guarantee model. According to the European Commission’s draft regulations applicable to trades in OTC derivatives, all such trades will have to be cleared at CCPs as of 1 January 2013.
"The selection of NASDAQ OMX resulted from a thorough evaluation of technology vendors. Thanks to co-operation with a global supplier and a partner to the major clearing houses around the world, we will gain access to extensive experience from our NASDAQ OMX partnership and develop a clearing and risk management model that is optimal for the Polish market," said KDPW_CCP President and CEO Iwona Sroka.
"NASDAQ OMX offers us a product which can be smoothly integrated with the depository-settlement system kdpw_stream and its functionalities including the collateral register and the Clearing Fund modul and with our other IT systems like ERP," said KDPW_CCP Vice President of the Management Board Sławomir Panasiuk.
About the OTC trade clearing service
The project of implementing OTC derivatives trade clearing and guarantee functions will improve the safety of clearing trades concluded outside the organised market. "The solution which is currently under development at KDPW_CCP using the technology of the global supplier NASDAQ OMX addresses the needs and expectations of market participants as well as the regulations proposed by the European Commission. KDPW_CCP will be ready to offer the service at the time when the EU regulations come into force," said KDPW_CCP President and CEO Iwona Sroka.
OTC market structure improves with CCP clearing
Source: Own study
Another requirement laid down in the proposed regulations is the mandatory reporting of OTC trades to central trade repositories. KDPW Group will also offer such functionality.
From the very beginning, all OTC trades cleared at KDPW_CCP will be covered by a three-tier clearing guarantee system according to the draft regulations and international standards.
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