Skip Ribbon Commands
Skip to main content
Navigate Up


The Financial Supervision Authority has approved the amendments to the Transaction Clearing Rules which introduce novation to clearing

The Financial Supervision Authority has approved the amendments to the Transaction Clearing Rules of the clearing house KDPW_CCP which introduce novation to clearing. Thanks to novation, the clearing house becomes a central counterparty (a buyer to each seller and a seller to each buyer) while the mutual rights and obligations of original trade counterparties expire. Novation applies to all trade cleared in KDPW_CCP.

"KDPW_CCP becomes directly responsible for clearing trade as it must ensure clearing, if necessary with its own capital. With adequate capital (PLN 200 million) and a clearing guarantee system (appropriate risk measurement, margins, clearing fund), KDPW_CCP takes over a substantive part of investment risk of default of trade counterparties. This enhances the safety of trade and reduces clearing risk to investors and, consequently, the risk of default of financial institutions," said KDPW_CCP President and CEO Iwona Sroka.

Novation has been introduced to the Polish legal system in an amendment of the Act on Trading in Financial Instruments adopted by the Sejm on 28 June 2012. The Polish market was one of the last EU markets to introduce novation to its legislation. This is relevant because EMIR* requires trade to be cleared by a central counterparty (CCP). In the absence of a CCP clearing house on the local market, clearing of trade made in Poland could be moved to a foreign clearing house.

Novation allows the KDPW_CCP clearing house to take over the mutual rights and obligations of original trade counterparties both in organised trading including the WSE’s Main Market, Catalyst, NewConnect, BondSpot, and on the OTC market as soon as a trade is accepted for clearing.

"Harmonisation with the requirements of European regulations and international standards makes the Polish financial market more competitive and more attractive both to local and international investors. This is crucial to further growth and enhanced safety of the local financial market." stressed Iwona Sroka.

 

* Regulation of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories (EMIR)​

Last modified: 29-10-2012 Go up