On 19 December 2012, the Polish Financial Supervision Authority (KNF) approved the Transaction Clearing Rules (Non-organised Trading). The Rules take effect as of 2 January 2013. As of that date, the clearing house KDPW_CCP will start clearing trade in the OTC clearing system.
With the launch of the OTC derivatives and repo clearing service, the Polish market is ready to comply with the provisions of the Regulation of the European Parliament and of the Council on OTC derivative transactions, central counterparties and trade repositories (EMIR). The Regulation requires specific classes of OTC derivatives to be cleared through CCP clearing houses. Clearing of OTC derivatives through CCP clearing houses should mainly mitigate the risk of default of trading parties.
On 19 November 2012, in line with the project timetable, the clearing house KDPW_CCP made available for testing the kdpw_otc system used to clear OTC trade. Some market participants are already using the kdpw_otc system test environment.
The clearing house KDPW_CCP has prepared promotional terms for institutions which decide to join the clearing house in OTC trade by 29 March 2013. Clearing members that acquire the status of OTC clearing system participant by 29 March 2013 will be relieved of the Fee for an entry in the register of participants (PLN 50,000; ca. EUR 12,500) and the Participation fee for the year 2013 (PLN 20,000, ca. EUR 5,000).
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 ca. EUR 50 million," said Iwona Sroka, CEO 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.