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Securities Netting: Lower Settlement Cost

 
The clearing house KDPW_CCP has launched the securities netting mechanism as of 4 August 2014, which means in practice that KDPW_CCP may generate one settlement instruction sent to KDPW (or another settlement institution) for securities and/or cash settlement for all operations which credit and/or debit a designated settlement account.
 
The implementation of netting and aggregation (directional netting) of debits and credits in securities arising from cleared transactions concluded on the regulated market or in an alternative trading system implies improved operating standards of the clearing process resulting in a significant reduction of the number of instructions sent for settlement while reducing the cost of trade settlement” said Iwona Sroka, CEO and President of KDPW_CCP.
 
Non-cash netting or aggregate non-cash clearing will cover non-cash debits and credits arising from cleared transactions provided that:
• the clearing member has selected such mode of settlement;
• such trades are to be settled on the same date;
• securities under such trades are marked by KDPW with the same identifier in the depository system (ISIN code).
Both non-cash netting or aggregate non-cash clearing will only be performed to the extent of the settlement of transactions registered in clearing accounts designated by a participant holding the status of clearing member for such transactions.
 
The netting service (including directional netting) was launched on 4 August 2014, which means in practice that netting and partial settlement will only apply to instructions for guaranteed transactions concluded as of 4 August 2014 (inclusive).
 
Along with partial settlement, launched by KDPW also on 4 August 2014, the netting service enhances the services provided to banks and brokerage houses – participants of both institutions, reduces the processing cost of such operations, and significantly improves the clearing and settlement process.
These are some of the KDPW Group’s projects aimed at implementing global post-trade service standards on the Polish financial market in order to offer solutions available from the most advanced financial centres of the world.
Last modified: 23-10-2014 Go up