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Year 2013 In KDPW Group

KDPW Group, comprised of the Central Securities Depository of Poland (KDPW) and the clearing house KDPW_CCP, implemented several projects key to the quality of the post-trading infrastructure in Poland in 2013.

KDPW developed the trade repository service, registered the trade repository with the European Securities and Market Authority (ESMA), and was authorised to assign legal entity identifiers (LEI). KDPW also standardised the processing of some corporate actions, modified the automatic securities lending service, and launched a confirmation platform for repo transactions.

KDPW_CCP focused in 2013 on efforts necessary to prepare the clearing house for authorisation under the European Market Infrastructure Regulation (EMIR) and on projects related to the development of the OTC_clearing service. KDPW_CCP offered the service of reporting the details of derivative contracts to the KDPW Trade Repository on behalf of counterparties. It should be noted that KDPW_CCP charges no fees for such intermediation.

The year 2014 will witness many changes on the financial market in the European Union brought about by EMIR. The obligation of reporting the details of derivative contracts to trade repositories takes effect already on 12 February 2014. KDPW has been one of four institutions in Europe to register a trade repository with ESMA. Reporting entities may fulfil the obligation imposed by the EU regulations only by reporting to trade repositories registered by ESMA. The obligation applies to all legal entities concluding derivative contracts on the regulated market and in OTC trade.

In order to report, entities must hold a unique global code: the legal entity identifier (LEI) assigned to institutions trading on the derivatives market. KDPW has been authorised to assign LEIs, which extends the range of its services as a numbering agency (KDPW has for years assigned ISIN codes to financial instruments).

EMIR also imposes the obligation of clearing trades concluded on the interbank market in authorised CCP clearing houses. The obligation will take effect at the turn of 2014 to 2015. In 2013, KDPW_CCP filed an application with the Polish Financial Supervision Authority for authorisation under EMIR; the supervisor’s authorisation decision is expected in early May 2014.

If there was no trade repository registered by ESMA on the Polish market, KDPW did not assign LEIs, and KDPW_CCP did not apply for authorisation or offer the OTC derivatives clearing service, players active on the Polish market would have to use the services of foreign institutions which offer such solutions.

“It is our aspiration to develop an integrated, complementary package of depository, clearing, settlement and added-value services competitive to those offered by European institutions. Consequently, we implement projects addressed both to the regulated market and OTC trade, the cash and the derivatives market. We are present not only on the capital market but more broadly as we offer services to the entire financial sector. Thanks to synergies between KDPW and KDPW_CCP, we can achieve that at lower costs,” said KDPW President and CEO Iwona Sroka about the projects implemented by KDPW Group.

The KDPW Group companies were also engaged in the harmonisation of kdpw_stream with WSE’s new trading system and the preparation of KDPW for PLN settlement in SORBNET2.

“The year 2014 will be busy as well. We will continue our existing initiatives, such as the development of the KDPW_TR service and the assignment of LEIs. In 2014, we expect to have KDPW_CCP authorised. However, we will also introduce new solutions for the market, including securities netting which will reduce the number of settlement instructions and, consequently, the cost of transaction settlement. We will complete the development of a new functionality in KDPW: the valuation and update of repo collateral with KDPW acting as a tri-part-repo agent. Furthermore, we will actively work to expand the range of instruments offered in the OTC_clearing service: we will introduce cross-currency derivatives and instruments in currencies other than PLN,” said Iwona Sroka.


KDPW_CCP

On 28 June 2013, the clearing house KDPW_CCP filed an application with the Polish Financial Supervision Authority for authorisation under the European Market Infrastructure Regulation (EMIR) which lays down among others uniform requirements applicable to clearing houses in the European Union. The authorisation will affirm the ability of KDPW_CCP to provide services under EU standards across the European Union and will enable reporting entitles to comply with the obligation of reporting specific classes of OTC derivatives.

“On 4 November 2013, KDPW_CCP was notified by the Polish Financial Supervision Authority that its application for authorisation under the requirements of EMIR was declared on that day to be complete. KDPW_CCP should be notified of the supervisor’s authorisation decision by 4 May 2014,” said KDPW_CCP President and CEO Iwona Sroka.

Pursuant to the procedure laid down in EMIR, the application of KDPW_CCP will be processed according to the following timeline:

  • Within 4 months (starting on 4 November 2013), the local supervisory authority which has received the application (PFSA) will perform a risk assessment of KDPW_CCP and submit a report to the college of supervisors established to evaluate the risks of the clearing house. [04.03.2014]
  • Within 30 calendar days of receipt of the report, the college will reach an opinion determining whether KDPW_CCP complies with the requirements for central counterparty clearing houses laid down in EMIR. [03.04.2014]
  • Pursuant to EMIR, the local supervisory authority (PFSA for KDPW_CCP) has 6 months of confirming the completeness of the application to evaluate the clearing house and decide whether to grant or refuse the authorisation. [04.05.2014]

“The major changes preparing our clearing house and its legal environment for authorisation included efforts necessary to introduce novation into the Polish legal system, increase own capital of KDPW_CCP adequately to the size of the served markets, modify the clearing guarantee system waterfall, and appoint the Risk Committee,” said KDPW_CCP President and CEO Iwona Sroka.
On 2 January 2013, the Rules of Transaction Clearing (non-organised trading) entered into force, initiating the service of clearing and guaranteeing the clearing of OTC derivatives and repo transactions. On 19 February, Raiffeisen Bank Polska S.A. became the first participant of the clearing house for the clearing of OTC derivatives.

On 12 June 2013, the KDPW_CCP Supervisory Board appointed the Risk Committee. The Risk Committee provides opinions and advice on all matters affecting risk management, in particular any significant change of the risk model, clearing member default procedures, criteria of granting clearing member status, clearing of new classes of derivative instruments or outsourcing. KDPW_CCP was required to appoint the Risk Committee before it could file the authorisation application. The Risk Committee is comprised of the independent members of the Supervisory Board and representatives of organisations of different groups of the clearing house stakeholders including banks, brokerage houses, issuers and investors.

KDPW_CCP offered clearing and guaranteeing of the clearing of new instruments introduced to trading on WSE on 18 October 2013: futures contracts on WIBOR reference rates and futures contracts on Treasury bonds. In such clearing, KDPW_CCP among others registers concluded transactions and other operations in futures contracts, calculates the credits and debits in respect of marking to the market and the final clearing of futures contracts. “In order to enhance the competitiveness of the futures market in Poland, we have decided to temporarily waive the fees for the registration of transactions in futures contracts introduced to trading on 18 October 2013 and for transfers of positions in such contracts. The fee waiver is effective until 18 October 2014,” said Iwona Sroka.

See also: 2013 Milestones

Last modified: 10-01-2014 Go up