KDPW_CCP will clear a new product, Exchange Traded Commodities (ETC), introduced to trading on the Warsaw Stock Exchange (GPW) on 30 August 2023. The issuer of the first physical gold ETC listed in Warsaw is the European ETF platform HANetf.
KDPW_CCP clears transactions using a range of mechanisms to systemically reduce the risk of default by the parties to transactions, which significantly improves the safety of capital market operations. As an important feature of KDPW_CCP, its equity can be used in the clearing guarantee system, which improves the safety of clearing and ensures a robust framework for comprehensive management of all material risks.
For ETCs, KDPW_CCP will use clearing and risk management mechanisms that are standard for the cash market. Like other cash market instruments, ETCs are settled in KDPW in the T+2 cycle.
ETCs are mostly passive, physically backed instruments which resemble ETFs in operation but are created and offered as debt instruments with full physical collateral. What is new in relation to the products so far offered on GPW that give exposure to gold is that the ETCs are fully backed with physical gold and investors can redeem them with the issuer for physical gold, corresponding to the value of the ETCs held.
The new product offers exposure to physical gold sourced responsibly and held at the British Royal Mint. The gold ETC was created by HANetf in partnership with the British Royal Mint and launched in February 2020. The instrument is denominated in US dollars, the base currency of the ETC. One ETC is equivalent to the value of 0.01 ounces of gold.
ETCs are debt securities traded on exchanges, bought and sold at market prices, equivalent to the value of the underlying asset held in the vault per instrument. ETCs may be listed in currencies other than the base currency and traded on one or more exchanges. The final ETC price therefore also depends on the exchange rate of the local currency against the USD.
More information on the new product is available on the websites of the issuer