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New Services of KDPW and KDPW_CCP for the Banking Sector

A joint press conference of the Polish Banks’ Association, KDPW and KDPW_CCP introduced among others new services offered by the KDPW Group to the banking sector: clearing and guaranteeing trade in OTC derivatives, and a trade repository. The solutions address European regulations (EMIR Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (EMIR).), aiming to rebuild trust on the interbank market and improve its liquidity, which has been strongly affected by the turbulences on the financial markets in the past years.

KDPW and KDPW_CCP CEO and President Iwona Sroka said that KDPW and the clearing house KDPW_CCP enter a new area of providing services to the banking sector: “Our activities have so far focused on the capital market. Now we are adding the banking sector to our offer so our area of activity can cover the broadly understood financial market.”

At the meeting, Polish Banks’ Association President Krzysztof Pietraszkiewicz speaking on behalf of the Association congratulated the Management Board of KDPW_CCP and all parties involved in the project of launching the OTC derivatives clearing service. Mr Pietraszkiewicz stressed the great importance of the new functionality to the banking market. The introduction of the new service will also impact the financing of borrowers as part of the capital of Polish banks will be released (thanks to risk mitigation under European standards) to be used for new investments. The President of the Association declared the intention of continued co-operation with KDPW_CCP in the preparation of new projects promoting good practice and sustainable development of the entire Polish financial market.

On 19 December 2012, the Financial Supervision Authority approved the Transaction Clearing Rules (Non-Organised Trading). The Rules will come into force on 2 January 2013, and the service will be launched. “This completes the two years of preparations for the implementation of the interbank market derivatives clearing service in KDPW_CCP pursued in co-operation with experts from the biggest Polish banks. I wish to thank the Polish Banks’ Association, the Financial Markets Association ACI Polska and all banks engaged in the work on the development of the service,” said KDPW_CCP CEO and President Iwona Sroka.

The clearing house KDPW_CCP has prepared promotional terms for institutions that decide to join the clearing house in OTC trading by 29 March 2013. “Those clearing member that acquire OTC clearing system participation by 29 March 2013 will be relieved from the Fee for an entry in the register of participants at PLN 50 thousand and the Participation fee for the year 2013 (PLN 20 thousand),” said Iwona Sroka.

In the second half of November 2012, as previously announced, the clearing house KDPW_CCP made available for testing the system kdpw_otc which supports clearing of OTC trade. Market participants are already using the kdpw_otc system test environment.

In the first phase, the clearing house KDPW_CCP will offer clearing of transactions denominated in Polish zlotys, including Forward Rate Agreements, Interest Rate Swaps, Overnight Index Swaps, Basis Swaps and Repos (for Polish Treasury bonds). As of 2014, the clearing house is also planning to clear derivatives denominated in other currencies. Clearing of OTC derivatives through CCP clearing houses mainly aims at mitigation of the risk of default of trading parties.

Parties to transactions in OTC derivatives confirm trade on one of two confirmation platforms (MarkitWire or SWIFT Accord), which subsequently send clearing instructions to the clearing house. KDPW_CCP novates and clears trade in the system kdpw_otc. “Sending transactions for clearing to KDPW_CCP means that the transactions are covered by a multi-tiered clearing guarantee system which ensures the safety of payment by the parties. One of the system’s elements is the capital of the clearing house, which is currently PLN 200 million,” said Sławomir Panasiuk, Deputy President of KDPW_CCP.

The offer of the KDPW Group is complemented by a trade repository: a register of information about concluded transactions in derivatives, operational as of 2 November 2012. The obligation to report OTC trade to a trade repository is also laid down in EMIR and is likely to enter into force as of July 2013.

The trade repository operated under the Trade Repository Rules approved by the KDPW Management Board, which set out among others the rules of participation in the repository, identification of counterparties and transactions. At the turn of Q1 and Q2 2013, KDPW will initiate the registration of the trade repository with ESMA (European Securities and Markets Authority) under the requirements of EMIR.

In the first phase of operation of the trade repository, both participation and trade reporting are relieved from fees.

The press conference on 20 December 2012 brought together: Krzysztof Pietraszkiewicz, President of the Polish Banks’ Association; Iwona Sroka, CEO and President of the National Depository for Securities (KDPW) and KDPW_CCP; Sławomir Panasiuk, Deputy President of the National Depository for Securities (KDPW) and KDPW_CCP; Mieczysław Groszek, Deputy President of the Polish Banks’ Association; Jerzy Bańka, Deputy President of the Polish Banks’ Association; Marcin Idzik, TNS Polska.

Last modified: 20-12-2012 Go up