Re.: Modifications in KDPW and KDPW_CCP IT systems scheduled in 2017

Transcription

1 SCP/ZW/12/2016 CCP/ZW/609/2016 Warsaw, 30 September 2016 KDPW Participants KDPW_CCP Participants Re.: Modifications in KDPW and KDPW_CCP IT systems scheduled in 2017 Dear Sir or Madam, Below please find details of our plans for 2017 in connection with modifications in the KDPW and KDPW_CCP IT systems resulting from changes in the scope of provided services and from regulatory changes. This document covers both the projects which are scheduled for implementation in 2017 and the projects which will already be at an advanced stage of implementation in 2017, requiring modifications in your IT systems. This is also to invite you and your IT system vendors to a meeting on Wednesday, 19 October 2016, at 11:00 a.m. (KDPW, Conference Room, 4 th Floor, entrance on Książęca St. side) where we will present the detailed plans for Due to a limited number of participants we can accommodate, kindly confirm your presence no later than Friday, 14 October, by at bozena.koziorynski@kdpw.pl To enhance effective implementations and assist you in scheduling relevant modifications in IT systems well in advance, we have followed since last year the principle of scheduling two implementation windows each year. Consequently, we have scheduled the following in 2017: spring implementation window dates: April, autumn implementation window dates: November. List of projects involving modifications of KDPW and KDPW_CCP IT systems the list is subject to change depending on changes in the external environment, in particular regulatory changes and new business needs: Krajowy Depozyt Papierów Wartościowych Spółka Akcyjna z siedzibą w Warszawie (00-498) przy ulicy Książęcej 4, wpisana do rejestru przedsiębiorców prowadzonego przez Sąd Rejonowy dla m. st. Warszawy, XII Wydział Gospodarczy Krajowego Rejestru Sądowego, pod nr KRS , NIP , wysokość kapitału zakładowego i kapitału wpłaconego zł, T , F , E kdpw@kdpw.pl, KDPW_CCP Spółka Akcyjna z siedzibą w Warszawie (00-498) przy ul. Książęcej 4, lok. 6089A, wpisana do rejestru przedsiębiorców prowadzonego przez Sąd Rejonowy dla m. st. Warszawy, XII Wydział Gospodarczy Krajowego Rejestru Sądowego, pod nr KRS , NIP: , wysokość kapitału zakładowego i kapitału wpłaconego zł, T , F , E ccp@kdpw.pl,

2 SPRING IMPLEMENTATION WINDOW April Harmonisation with the CSDR requirements Phase 1 harmonisation of KDPW and KDPW_CCP participant IT systems mandatory In 2017, we will continue to work on the authorisation of KDPW, including in particular the systemic and regulatory alignment with the requirements of Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories (CSDR) and the technical standards which are the implementing legislation accompanying the Regulation. In view of the later than expected effective date of the technical standards on settlement discipline and following arrangements agreed with you, the work on the implementation of modifications in IT systems has been divided into two stages (among other things, to distribute it evenly over time). Phase 1 (implementation in the 2017 spring implementation window) covers some changes of functionalities supporting settlement processes (mainly, work necessary to align the content of the settlement instructions with the data maintenance requirements); Phase 2 (implemented within 24 months after the effective date of the technical standards on settlement discipline, i.e., not earlier than 2018) will achieve the necessary harmonisation with the settlement discipline requirements (including special fees, reporting, and other functionalities supporting settlement processes). As communicated to you in May and June 2016 (letters SCP/ZW/3/2016 of 9 May 2016 and SCP/ZW/7/2016 of 29 June 2016), we are planning to implement the following modifications in the 2017 spring implementation window: alignment of repo and sell-buy-back transaction processing agreed in NMPG S&R; volume of debt instruments stated using face amount (record keeping and statistical data requirements in the draft technical standards on requirements for CSDs of 28 September 2015 Annex IV, and Article 5 of the draft technical standards on settlement discipline of 1 February 2016); change of the length of fields in kdpw_stream XML messages (modifications resulting from the requirement to state the volume using face amount); addition of the field Place of clearing to settlement instructions (record keeping and statistical data requirements in the draft technical standards on requirements for CSDs of 28 September 2015 Annex IV); changes in instruction matching (requirements under Article 5 of the draft technical standards on settlement discipline of 1 February 2016); settlement instruction recycling (requirements of Article 9 of the draft technical standards on settlement discipline of 1 February 2016); discontinuation of the NKK (client classification number) database operated by KDPW. It should be noted that the implementation of the modifications, in particular the modifications in bullet points 2 to 4, will modify the structure of XML messages used in communications with kdpw_stream. 2 / 8

3 Materials: The details of the implementation of the functionality have been communicated to you in the aforementioned letters while the complete documentation of the modifications (including specifications of the new versions of XML messages) is available for download on our website: KDPW - tab: kdpw_stream/guide to the kdpw_stream website/planned changes, KDPW_CCP tab: Members/IT Tools - organised trading/planned changes and Members/ IT Tools otc trading/planned changes Tests: The test environment will be available to participants and the testing will launch in late January 2017; the detailed terms and conditions and the test scenarios will be communicated separately. We expect to provide the test environment early to software vendors; your solution vendors are requested to contact us by at di_serwis@kdpw.pl 2. Standardisation of corporate action processing under ISO harmonisation of KDPW participant IT systems mandatory In 2017, KDPW will continue to develop services which standardise and automate corporate action processing, in particular the implementation of the exchange of information under ISO As communicated to you in December 2015 and March 2016 (letters no. DO/ZW/1776/2015 of 16 December 2015 and DO/ZW/483/2016 of 21 March 2016), KDPW will implement modifications in the processing of cash payments from securities and accompanying processes (tax payments) in the 2017 spring modification window: cash dividend payment event identifier: DVCA; payment of income from closed-ended investment funds without redemption of investment certificates event identifier: CAPG; processing of tax certification in the Relief at Source procedure event identifier: WTRC; processing of the tax identification of beneficial owners of securities using KDPW s own messages (DSCL - Disclosure Instruction); payment of interest on debt securities event identifier: INTR; full redemption of debt securities at maturity event identifier: REDM; full early redemption of debt securities at the request of the issuer event identifier: MCAL; processing of tax certification in the Quick Refund procedure event identifier: WTRC. Materials: Detailed materials describing the planned modifications have been communicated to you in the aforementioned letters. Please be reminded that the project information including the complete project documentation is available on the KDPW website in the dedicated tab: Business/Development/ Standardisation of corporate action processing: payments. Please be advised that we will provide additional information, no later than 14 October, concerning the planned corrections of the identification of beneficial owners of securities related to harmonisation with the content of foreign tax forms and extension of the Quick Refund functionality. Tests: Detailed information about the availability of the test environment to participants and the planned testing will be communicated separately in November 2016; we expect to test the processing of cash payments in DVCA and CAPG operations starting in December 2016 and to test other operations starting in January / 8

4 We expect to provide the test environment early to software vendors; your solution vendors are requested to contact us by at AUTUMN IMPLEMENTATION WINDOW November Implementation of ISO20022 message processing in settlement Phase 1 harmonisation of KDPW participant IT systems optional To enable you to use the standard solutions applied by financial institutions on foreign markets (among other things, to communicate with T2S), KDPW is running a project which aligns kdpw_stream with ISO20022 message processing in settlement. Following a project analysis, the work on the implementation of modifications in kdpw_stream has been divided into two phases. In 2017, we will implement Phase 1, implementing the processing of the main ISO20022 messages in settlement in kdpw_stream including: settlement instruction sese , settlement confirmation sese , settlement instruction status sese , account statement semt It should be noted that ISO20022 messages will be processed in kdpw_stream in parallel to KDPW XML messages and MT messages. Materials: Detailed information about the planned modifications will be communicated in Q Testy: Testing with participants is scheduled in Q Modifications of the processing of securities transfer orders (FoP transfers) to foreign CSDs harmonisation of KDPW participant IT systems mandatory for participants executing such operations The planned modification applies to the schema of booking instructions to transfer securities to another account with a foreign CSD. According to the participant s instruction, in the first step, securities to be transferred will be blocked (KDPW will generate an additional instruction to change the assets status); after the transfer has been processed by the foreign CSD, KDPW will issue a relevant settlement instruction which will be matched with the participant s instruction to remove the blocked securities from the account. The modification has been outlined in our letter SCP/ZW/7/2016 of 29 June 2016 (point 2) as a modification considered for implementation in the spring implementation window. Following a review of the feasibility of the work, we have decided to implement it in the 2017 autumn implementation window. Materials: Detailed information about the planned modifications will be communicated in Q Tests: Testing with participants is scheduled in Q / 8

5 Other key projects scheduled for implementation in 2017 which may impact your IT systems: 5. Replacement of certificates of the Certification Authority for SWI harmonisation of KDPW and KDPW_CCP participant IT systems using ESDI/WEB or ESDK in A2A mode - mandatory KDPW Certification Authority certificates for the ESDI/WEB and ESDK production and test environments expire on 14 March KDPW uses the certificates of the Certification Authority to generate certificates and cryptographic keys for KDPW and KDPW_CCP participants while users use them to authenticate certificates issued by KDPW. To minimise the impact of the replacement of certificates of the KDPW Certification Authority on participants, KDPW will use an overlap period: certificates for participants issued as of 14 March 2017 will be authorised with the new certificate of the Certification Authority, which will integrate an additional overlap certificate supporting the verification of both new and previous certificates issued by KDPW. If you use the electronic communication systems ESDI/WEB or ESDK in A2A mode, the modification may require alignment of your communication systems in order to support certificates signed with the previous and the new key of the Certification Authority as well as the overlap certificate. With this approach, the replacement of certificates of the KDPW Certification Authority will not affect the expiry date of certificates issued by KDPW to participants. Please recall that all valid certificates for ESDI/WEB and ESDK as well as VPN connections may be renewed remotely. Materials: Detailed information about the planned modifications will be communicated separately. 6. Development of the Trade Repository system and the services of the KDPW Numbering Agency In 2017, we will continue to develop the Trade Repository system and the services of the KDPW Numbering Agency (including the LEI issuance service). In view of the expected publication of the new technical standards accompanying EMIR, modifications will be required both in the KDPW Trade Repository IT system and in the participants IT systems. Materials: Detailed information about the planned modifications of the Trade Repository system will be communicated no later than Q In H1 2017, KDPW as a Numbering Agency will be harmonising with modifications of ISO by modifying the CFI issuance and data maintenance methods. The updated standard does not change the format of the identifier. It will continue to be an identifier of six alphanumerical characters (capital letters). However, the scope of the values (letters) allowed in the respective positions of the identifier will be extended. As a result, new combinations of the identifier will apply. The modification will help to better classify financial instruments. The new coding rules will apply to all new financial instruments encoded as of 1 April Furthermore, identifiers issued before that date will be modified no later than the end of Q (all instruments identified with the CFI will migrate to the new version of the standard). 5 / 8

6 Given that the CFI format will not be modified, the KDPW IT systems will not be modified to the extent of communications with participants. However, you may decide to what extent CFI will be used in your systems and whether they need to be upgraded due to the modification of the standard. Materials: Detailed information about the planned modifications of CFI issuance will be communicated in Q IMPLEMENTATIONS SCHEDULED IN Standardisation of processing of other corporate actions involving payments under ISO harmonisation of KDPW participant IT systems mandatory In 2017, we will continue another phase of project work to standardise corporate action processing under ISO The project will cover corporate actions which are mandatory, optional and voluntary, involving cash or non-cash payments, which are less frequent and as such have been postponed until a later phase of standardisation of corporate actions under ISO 20022: partial repayment of the face amount; early voluntary redemption of securities; early partial mandatory redemption of securities at the request of the issuer; dividend payment with a payment selection option executed through two corporate actions: distribution of intermediate securities and dividends with options. Materials: Detailed information about the aforementioned modifications will be communicated in Q Tests: Testing is scheduled to start in Q Harmonisation with the CSDR requirements Phase 2 harmonisation of KDPW and KDPW_CCP participant IT systems mandatory In the second phase of the project of authorisation of KDPW under CSDR, we are planning to implement modifications in the IT systems in order to align as necessary with the settlement discipline requirements (mainly special fees and reporting). As communicated to you before (letter SP/ZW/3/2016 of 9 May 2016), this phase of the project is expected to introduce modifications in connection with functionalities supporting the liquidity of settlement as well as data maintenance requirements: designation of types of settlement operations under the requirements of ISO15022/20022 (requirements of Article 35 of CSDR, record keeping requirements of the draft technical standards on requirements for CSDs of 28 September 2015, requirements of Articles of the draft technical standards on settlement discipline of 1 February 2016); modifications of the identifiers of post-trade settlement; type of instructions (requirements of Articles of the draft technical standards on settlement discipline of 1 February 2016 and Article 43 of the draft technical standards on requirements for CSDs of 28 September 2015); 6 / 8

7 modifications in the tolerance level functionality (requirements of Article 6 of the draft technical standards on settlement discipline of 1 February 2016); modifications concerning cancellation of settlement instructions (requirements of Article 7 of the draft technical standards on settlement discipline of 1 February 2016); processing of the field Place of clearing in settlement instructions; modifications of the existing hold-release mechanism (requirements of Article 8 of the draft technical standards on settlement discipline of 1 February 2016); as well as modifications concerning settlement discipline: mechanisms supporting buy-in of securities on the open market requirements of Article 7 of CSDR and requirements of Articles of the draft technical standards on settlement discipline of 1 February 2016; modifications of the partial settlement functionality requirements of Articles 10 and 23 of the draft technical standards on settlement discipline of 1 February 2016; new system of fees for late settlement, including redistribution of fees to counterparties - requirements of Article 7 of CSDR, requirements of Articles of the draft technical standards on settlement discipline of 1 February 2016, and requirements of point 2.1 of the draft Technical Advice under the CSD Regulation of 4 August 2015; implementation of the new terms of valuation of securities - requirements of point 2.1 of the draft Technical Advice under the CSD Regulation of 4 August 2015; monitoring of participants timely settlement and assessment of the effectiveness of settlement, reporting of settlement discipline requirements of Article 7 of CSDR, requirements of Articles of the draft technical standards on settlement discipline of 1 February Materials: As announced in the letter of May 2016, the detailed materials concerning the planned modifications (including publication of the specification of new XML messages on the website) will be communicated 18 months before the effective date of the technical standards on settlement discipline. Tests: The test environment will be available and testing will start 5 months before the effective date of the technical standards on settlement discipline. Considering that the final text of the technical standards on settlement discipline, the date of their publication and their effective date are yet unknown, it would be difficult to specify the exact dates of the phases of the project. However, considering ESMA s plans in view of the effective date of the technical standards (24 months after publication), they are not likely to be implemented before the turn of 2018 to The detailed timeline of project work and the exact date of implementation will be defined by KDPW following the publication of the technical standards. 9. Development of the Trade Repository system Launch of the service of the approved reporting mechanism (ARM) KDPW acting as a Trade Repository has taken measures to launch the approved reporting mechanism (ARM) service, which means a person authorised to provide the service of reporting details of 7 / 8

8 transactions to competent authorities on behalf of investment firms according to the definition in MiFID II. With automated, secure communication interfaces and KDPW s existing model of relations with supervision authorities and participants, we expect that the selection of KDPW as the ARM will help entities subject to the reporting obligation to properly comply with the reporting obligation without interruption. The solution will be particularly advantageous to KDPW trade repository participants because all trade reports sent to the repository, containing details of transactions required under Article 26 of MiFIR, will be provided to the competent authority, ensuring compliance with the obligation of the reporting entity under MiFIR. The trade reporting obligation under Article 26 of MiFIR shall apply as of 3 January Materials: Detailed information about the ARM service will be communicated in Q Launch of reporting of transactions financed with securities KDPW acting as a trade repository is planning to harmonise with the requirements of reporting transactions financed with securities by counterparties (repo, sell/buy back, securities lending) under Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 (SFTR). The requirement is likely to enter into force in Materials: The detailed information about the service will be communicated in Q (the actual date depends on legislative progress in EU institutions). Yours sincerely, Sławomir Panasiuk Vice President of the Management Board C/C: BondSpot S.A. Warsaw Stock Exchange Chamber of Brokerage Houses National Bank of Poland Council of Custodian Banks at the Polish Banking Association 8 / 8