Re.: Modifications to KDPW and KDPW_CCP IT systems scheduled in 2018

Transcription

1 SCP /ZW/19/2017 CCP/ZW/661/2017 Warsaw, 29 September 2017 To: KDPW Participants KDPW_CCP Participants Re.: Modifications to KDPW and KDPW_CCP IT systems scheduled in 2018 Dear Sir or Madam, Below please find information about our plans for 2018 involving modifications to the IT systems of KDPW and KDPW_CCP due to changes in the scope of provided services and regulatory amendments. The information covers projects which we are planning to implement in 2018, as well as projects advanced in 2018 which require modifications to your IT systems. To ensure efficient implementations and allow you to schedule the necessary modifications to your IT systems well in advance, according to the concept of implementing modifications in implementation windows, we have scheduled the following in 2018: spring implementation window: April, autumn implementation window: November. List of projects involving modifications to the IT systems of KDPW and KDPW_CCP: the list below is subject to change depending on developments in the external environment, in particular the regulatory environment, as well as new business needs: SPRING IMPLEMENTATION WINDOW April 2018 Krajowy Depozyt Papierów Wartościowych Spółka Akcyjna (KDPW S.A.), registered office: Warsaw , 4 Książęca Street, entered in the Company Register by the Warsaw District Court, 12th Commercial Division of the National Court Register, KRS Register no , VAT no , share and paid-incapital PLN 21,000,000, T , F , E kdpw@kdpw.pl, KDPW_CCP Spółka Akcyjna (KDPW_CCP S.A.), registered office: Warsaw , 4 Książęca Street, room 6089A, entered in the Company Register by the Warsaw District Court, 12th Commercial Division of the National Court Register, KRS Register no , VAT no , share and paid-in-capital PLN 190,000,000., T , F , E ccp@kdpw.pl,

2 1. Introduction of the requirement for KDPW to send aggregated account balances on each business day in alignment with the CSDR requirements harmonisation of KDPW participants IT systems mandatory In 2018, we will continue work aiming to align the services of KDPW with CSDR. In view of Article 64(4) of the CSDR technical standards (Commission Delegated Regulation (EU) 2017/392 of 11 November 2016 supplementing Regulation (EU) No 909/2014 of the European Parliament and of the Council with regard to regulatory technical standards on authorisation, supervisory and operational requirements for central securities depositories) which requires the provision of information (account balances) to direct participants as required for reconciliation, KDPW is planning modifications to the frequency of provision of registration account balances. Under the current regulations, balances are provided to participants on those days that any operations are registered in the account maintained for the participant. Under Article 64(4) of the CSDR technical standards, balances should be provided daily. In view of these provisions, KDPW is planning alignment of the distribution of aggregated balances. Please note that the implementation of this requirement involves no modifications to the structure of the XML message settlement account statement (semt.smt ); however, the flag N in field ActvtyInd (Activity indicator) will be used in practice. According to the current documentation, value Y in the XML message means that there are operations in the relevant account (value Y is used in practice) while value N means that there are no operations in the relevant account. Materials: Detailed information concerning this implementation will be communicated in October Tests: The test environment is scheduled to be open to participants and the tests are scheduled to start in Q Detailed information about the tests will be communicated separately. AUTUMN IMPLEMENTATION WINDOW November Processing of ISO messages in the area of settlement phase 2 harmonisation of KDPW participants IT systems optional To ensure that you can use standard solutions available to financial institutions in foreign markets (for example, to communicate with T2S), KDPW is running a project which will prepare kdpw_stream for the processing of ISO messages in the area of settlement. In phase 1 (2017 autumn implementation window), kdpw_stream will be modified to process the core ISO messages in the area of settlement: settlement instruction sese , settlement confirmation sese , settlement instruction status sese , account statement semt In 2018, in phase 2, further ISO messages in the area of settlement will be added to kdpw_stream including: 2 / 9

3 holding balances list semt ; asset status change semt ; modification instruction (technical instruction) sese ; pending counterparty instruction notification (allegement) sese ; instruction cancellation sese ; instruction status query sese Please note that the ISO messages will be processed in kdpw_stream in parallel to KDPW XML messages and MT messages. Materials: Detailed information concerning the planned modifications will be communicated in Q Tests: Tests with participants are scheduled in Q3 and Q Changes to the model of submitted instructions harmonisation of KDPW participants IT systems mandatory for participants using complex instructions As requested by market participants, KDPW has taken steps to modify the settlement instruction pooling mechanism (complex instructions). The target model will be discussed with market participants in S&R NMPG PL later this year. Please note that given the current status of work, the structure of settlement instructions may need to be modified to the extent of complex instruction fields. Materials: Detailed materials describing the planned modifications will be communicated in Q Tests: Tests with participants are scheduled in Q3 and Q Reporting income on clearing guarantee system resources to clearing members harmonisation of KDPW_CCP participants IT systems optional In view of the development of the range of services offered to clearing members in organised trading and OTC trade in line with the international practice, including client clearing, KDPW_CCP is planning to implement a new functionality in the systemic processing of income on margins and contributions to funds in order to regularly report income at the level of clearing members and members client accounts (as per NKK). Materials: Detailed information concerning the planned modifications will be communicated in Q Tests: Tests with participants are scheduled in Q / 9

4 Other major projects scheduled for implementation in 2018 (outside the scheduled implementation windows) which may impact your IT systems: 5. Harmonisation of kdpw_stream with UTP MiFID II harmonisation of KDPW_CCP participants IT systems mandatory in the project of the Warsaw Stock Exchange The Warsaw Stock Exchange has scheduled for 3 January 2018 the roll-out of the new version of the trading system UTP aligned with the latest regulatory requirements (MiFID II). In this connection, KDPW_CCP is running a project which will bring kdpw_stream in line with the new version of the trading system. Systemic changes in the project involve changes to the structure of XDP messages (exchanged between GPW and KDPW_CCP); however, they do not affect the post-clearing messages distributed to clearing members. Tests: The test environment was opened in August 2017; according to the test schedule, full tests with exchange members/clearing members will start in October 2017 (project work runs according to the scheduled defined by GPW). 6. Implementation of a Compensation Scheme solution KDPW is running a project which will implement a systemic solution supporting the exchange of information with participants of the compensation scheme in electronic format via the electronic communication system administered by KDPW. The structure of electronic messages will be based on the XML standard; participants of the compensation scheme will have access to electronic communications with KDPW through a web browser. The implementation of the new solution for communication with participants of the compensation scheme aims to eliminate paper document flows and mitigate operational risks. Materials: Detailed materials with information concerning the new Compensation Scheme solution will be communicated in October Tests: Tests with participants are scheduled in December Roll-out: The roll-out of the solution is scheduled for 3 January Launch of the ARM (approved reporting mechanism) service KDPW is running a project which will implement the approved reporting mechanism (ARM) service. According to the MiFID II definition, ARM means a person authorised to provide the service of reporting details of transactions to competent authorities on behalf of investment firms. According to 4 / 9

5 MiFIR, the reporting obligation under Article 26 of MiFIR takes effect on 3 January Consequently, KDPW is running focused project work to launch the ARM service by that date. Materials: Detailed materials with information concerning the ARM service implementation schedule and the specification of requirements were communicated in May and September 2017 (letters RT/ZW/189/2017 of 8 May 2017 and RT/ZW/360/2017 of 15 September 2017). Tests: Detailed information concerning access to the test environment and the test schedule will be communicated separately; the tests are expected to begin in November Roll-out: The roll-out of the service in production is scheduled for late December Launch of the securities financing transaction (SFT) reporting service Acting as a trade repository, KDPW is planning to align with the requirements for the processing of counterparty reports of securities financing transactions (repo, sell/buy back, securities lending and borrowing) according to Regulation (EU) No 2015/2365 of the European Parliament and of the Council of 25 November 2015 (SFTR). The obligation is likely to take effect in H (the final date depends on the progress of legislative work in EU institutions and it is subject to change). The obligation under SFTR is an important part of the EU s efforts aimed at increased transparency of the markets of securities financing transactions and, consequently, of the banking industry and the broadly understood financial system. SFTR imposes the obligation of reporting details of SFTs concluded by all market participants, including both financial and non-financial entities. KDPW is preparing for the provision of a new service for market participants to ensure that KDPW s complementary services allow trade repository participants (under SFTR and EMIR) to gain important benefits from being able to meet both obligations by reporting to a single TR operator. With automated and secured communication interfaces and KDPW s model of co-operation with supervisory authorities and participants, entities with the reporting obligation that choose KDPW will be in a positon to continuously meet the reporting obligations. Materials: Detailed information concerning the service will be communicated in Q1/Q Tests: Tests are scheduled in Q2/Q Roll-out: The roll-out is scheduled in Q3/Q Launch of the service of KDPW_CCP s reporting of securities financing transaction (SFT) to the KDPW trade repository harmonisation of KDPW_CCP participants IT systems optional Following KDPW s preparations for the provision of a new service of reporting securities financing transactions (SFT), KDPW_CCP is planning to develop a system for the reporting of SFTs to the trade repository. IT tools will be developed to support the reporting of securities lending and borrowing, 5 / 9

6 repos and reverse repos, buy-sell-back and sell-buy back transactions, collateral management transactions, etc. KDPW_CCP develops these new functionalities in order to provide participants with a comprehensive service of reporting details of derivatives transactions to the Trade Repository operated by KDPW. Materials: Detailed information concerning the service will be communicated in Q Tests: Tests are scheduled in Q Roll-out: The roll-out is scheduled for late Q (similar to point 8, the final date depends on the progress of legislative work in EU institutions and it is subject to change). 10. DLT e-voting application prototype In view of the advanced development of distributed ledger technology (DLT), KDPW is running a project which researches DLT applications, in particular DLT qualities of non-repudiation of records and transparency in the organisation of the KDPW Group s business processes. As a result of the analysis and expert evaluation, the business process of e-voting at General Meetings has been selected for implementation in a pilot. The terms of reference of the pilot have been presented at meetings with representatives of the Association of Listed Companies (SEG), the Council of Custodian Banks (RBD), the Chamber of Brokerage Houses (IZD), the National Bank of Poland (NBP) and the Polish Financial Supervision Authority (KNF). Detailed documentation of the process has been developed in the project work to date; subsequent phases of the project, i.e., implementation of the project and testing of the solution, will follow at the turn of Q1 and Q Participants interested in co-operation in the implementation and testing of blockchain technology are invited to contact KDPW. Tests: Tests of the pilot solution are scheduled in Q1/Q Modifications of the mode of access to KDPW Group applications via the website and access to website resources KDPW is running a project which will develop a system of access to the KDPW Group s applications and website, where one-off authentication provides access to multiple resources of the KDPW Group. The new access system will be based on uniform, consistent technologies which will simplify formal requirements and facilitate use of the KDPW Group s applications and website. The initiative is designed to ensure that the new solutions have minimum impact on the participants. 6 / 9

7 IMPLEMENTATIONS PLANNED IN 2019 and Standardisation of the processing of other corporate actions involving payments under ISO harmonisation of KDPW participants IT systems mandatory In 2018, we will continue another phase of project work aiming to standardise the processing of corporate actions under ISO The project will cover corporate actions which are mandatory or optional events involving cash or non-cash payments: partial redemption of the face value; early partial voluntary redemption of securities at the request of the issuer; early partial mandatory redemption of securities at the request of the issuer; dividend payment with the option of selection of benefits in two events: distribution of intermediate securities and dividend with an option; redemption of investment certificates at the request of beneficial owners; redemption of investment certificates upon liquidation of the fund. Materials: Detailed information concerning the planned modifications will be communicated in Q2/Q Tests: The test environment is scheduled to be open in January Roll-out: Scheduled in the 2019 spring implementation window. 13. Settlement operation codes under ISO 15022/20022 harmonisation of KDPW and KDPW_CCP participants IT systems mandatory With a view to optimising the implementation of ISO message processing and gradual alignment of functional areas with the international market practice, KDPW in collaboration with the National Market Practice Group (NMPG PL) is planning to implement standard attributes of settlement operations based on a four-character settlement operation type under ISO, a market code, and a trading mode. Materials: Detailed information concerning the planned modifications will be communicated in Q2/Q (the proposed settlement operation designations were communicated in Appendix 4 to letter SCP/ZW/3/2016 of 9 May 2016). Tests: The test environment is scheduled to be open in late Roll-out: Scheduled in the 2019 spring implementation window. 7 / 9

8 14. Harmonisation with CSDR requirements phase 2 harmonisation of KDPW and KDPW_CCP participants IT systems mandatory In the second phase of the project aimed at the authorisation of KDPW under CSDR, we are planning to implement modifications to the IT systems ensuring the necessary alignment with the requirements of settlement discipline (mainly, special fees and reporting) as well as functionalities supporting settlement. In this phase of the project, we are planning to implement changes to functionalities supporting the liquidity of settlement and data maintenance requirements: changes to the tolerance level functionality; changes to the cancellation of settlement instructions; processing of the settlement instruction field Place of clearing ; changes to the existing hold-release mechanism; modifications to the partial settlement functionality; as well as changes to the discipline of settlement: securities buy-in support mechanisms; new system of fees for late settlement, including redistribution of fees to counterparties; implementation of new rules of valuation of securities; monitoring of participants timely settlement and evaluation of the efficiency of settlement, reporting of the discipline of settlement. Materials: As communicated before (letter SCP/ZW/3/2016 of 9 May 2016), detailed materials concerning the planned modifications (including the publication of new XML message specifications on the website) will be communicated 18 months before the effective date of the technical standards on the discipline of settlement, i.e., in Q2/Q Tests: As communicated, the test environment is scheduled to be opened and the tests are scheduled to start approximately 5 months before the effective date of the technical standards on the discipline of settlement, i.e., in mid Roll-out: The modifications are not expected to be implemented before the turn of 2019 to The detailed schedule of project work and the exact date of the roll-out will be defined by KDPW after the publication of the technical standards. In view of the fact that the final provisions of the technical standards on the discipline of settlement and their publication date and effective date remain unknown, the dates of project phases are subject to change. 8 / 9

9 15. Addition of FpML messages in OTC derivatives clearing harmonisation of KDPW_CCP participants IT systems optional, eventually mandatory KDPW_CCP is running project work aiming to provide KDPW_CCP participants with new communication solutions, including the implementation of state-of-the-art solutions for participant access to dedicated system elements (GUI) and exchange of FpML messages. The exploration of the FpML standard, the preparation of specifications and the processing of new clearing messages are at an early stage of development. To define the area of application of the new communication standard, KDPW_CCP is planning to invite participants to joint collaboration and to establish a dedicated working group. We expect that the implementation of the state-of-the-art solutions will improve the quality of provided clearing services (standard messages, speed of communication) and enhance the efficiency and flexibility of the solutions used in clearing services. Materials: Detailed information concerning the planned modifications will be communicated in late 2018 Roll-out: The roll-out of the new standard (FpML messages) is scheduled no earlier than in Yours sincerely, Sławomir Panasiuk Vice President of the Management Board C/C: National Bank of Poland Warsaw Stock Exchange Bond Spot S.A. Chamber of Brokerage Houses Council of Custodian Banks of the Polish Bank Association 9 / 9