First KDPW_CCP Participant in OTC Derivatives Clearing?
Raiffeisen Bank Polska S.A. is the first entity to become a member of the clearing house KDPW_CCP in OTC derivatives clearing.
The obligation to clear OTC derivatives in CCP clearing houses is imposed by the EU EMIR Regulation*. The clearing house KDPW_CCP in partnership with experts from Poland’s biggest banks has developed the service on the Polish market. The service is available since 2 January 2013.
"KDPW_CCP offers promotional terms to institutions which decide to become clearing house participants in OTC clearing by 29 March 2013. Clearing members who become participants in OTC clearing by that date are relieved from the Fee for an entry in the register of participants at PLN 50 thousand (ca. EUR 12.5 thousand) and the Participation fee for 2013 (PLN 20 thousand, ca EUR 5 thousand)," said KDPW_CCP CEO and President Iwona Sroka.
In the first phase, the clearing house KDPW_CCP offers clearing of trades in the Polish zloty including Interest Rate Forwards, Interest Rate Swaps, Overnight Index Swaps, Basis Swaps and Repos (in Polish Treasury bonds). As of 2014, the clearing house will also offer clearing of derivatives in other currencies.
Parties to trade in OTC derivatives confirm trades on either one of two confirmation platforms (MarkitWire or SWIFT Accord), which then sends clearing instructions to the clearing house. KDPW_CCP performs novation and clearing of trade in the system kdpw_otc. "Sending trades for clearing in KDPW_CCP means that it is covered by a multi-tier clearing guarantee system that ensures payment by the counterparty," said KDPW_CCP Vice President Sławomir Panasiuk.
Clearing of OTC trade is a response to post-crisis regulations designed to restore confidence on the interbank market and enhance its liquidity, substantially affected by turbulences on the financial markets in the past years. By 2014, the clearing obligation will cover specific classes of OTC derivatives. The list of such instruments will be maintained by ESMA (European Securities and Markets Authority). They will be cleared in authorised professional clearing houses. Consequently, in April 2013, KDPW_CCP will initiate the authorisation process with the Polish Financial Supervision Authority (KNF) under 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.