KDPW Group State-of-the-art post-trade infrastructure. Dr. Iwona Sroka President & CEO of KDPW and KDPW_CCP

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1 KDPW Group State-of-the-art post-trade infrastructure Dr. Iwona Sroka President & CEO of KDPW and KDPW_CCP Warsaw, 15 September 2014

2 join the celebrations of the 25th anniversary of economic freedom in Poland was established in 1991 was separated in 1994, as an independent, join stock company was created in

3 Overview of the Polish Capital Market Financial Supervision Authority (KNF) KDPW WSE Main Market, BondSpot, Catalyst, NewConnect, OTC KDPW_CCP National Bank of Poland Institutional investors Financial institutions and intermediaries Issuers Individual investors 3

4 Polish Capital Market vs. Europe Equity market Market Operator London Stock Exchange Group 21,37% 20,56% NYSE Euronext 15,36% 15,21% Deutsche Börse 12,42% 12,29% BME (Spanish Exchanges) 8,31% 7,48% SIX Swiss Exchange 5,69% 6,28% NASDAQ OMX Nordic 5,71% 5,72% Oslo Børs 1,42% 1,11% Warsaw Stock Exchange 0,57% 0,64% CEESEG - Vienna 0,23% 0,23% Athens Exchange 0,15% 0,18% Boerse Stuttgart 0,14% 0,18% Irish Stock Exchange 0,09% 0,13% CEESEG - Budapest 0,11% 0,09% CEESEG - Prague 0,13% 0,08% Bucharest Stock Exchange 0,01% 0,01% Bulgarian Stock Exchange 0,00% 0,01% CEESEG - Ljubljana 0,00% 0,00% Luxembourg Stock Exchange 0,00% 0,00% Malta Stock Exchange 0,00% 0,00% Bratislava Stock Exchange 0,00% 0,00% Cyprus Stock Exchange 0,00% 0,00% Futures market 4

5 KDPW and KDPW_CCP 33% WSE NBP Treasury 33% KDPW: Trade repository service EMIR compliant. One of the first 4 trade repositories in UE. ESMA registration of KDPW_TR (7 Nov. 2013) 33% LEI one of the 14 agencies in the world allocating LEIs KDPW_CCP: Established: July % 100% of shares owned by KDPW KDPW_CCP own capital: PLN 223 M (ca. EUR 53 M) Central counterparty functionality through novation Reporting to KDPW_TR (non mandatory) KDPW_CCP the 3rd authorised clearing house in Europe 5

6 Main responsibilities of KDPW and KDPW_CCP 100% Settlement Regulated Market ATS Cash OTC Central Securities Depository Managing Deposit Accounts Registering and Safekeeping of Securities Corporate Actions Operational Links with Foreign CSDs Database Management Numbering Agency (ISIN, LEI) Clearing Regulated Market ATS Derivative OTC REPO OTC Investor Compensation Scheme Risk Management Asset Management SPAN VaR Guarantee Fund OFE Transfer Payments Trade Repository PLN Collateral Management Govt. Bonds T-Bills WIG20 Companies Exchange Clearing House (GIR KDPW)

7 At-a-Glance Statistics: August 2014 KDPW participants 67 KDPW_CCP participants 38 Issuers 1032 (of which 58 are foreign) Deposited equities issues 1089 Deposited bond issues 1033 Capitalisation of shares in KDPW EUR 141 billion Capitalisation of bonds in KDPW EUR 193 billion Number of cleared transactions cash market: M Value of cleared transactions cash market: EUR 107 Billion Number of cleared transactions derivatives market: 3.2 M Value of cleared transactions derivatives market: EUR 104 Billion

8 Operational Links with CSDs KDPW maintains 19 operational links with foreign depositories: 9 direct links between KDPW and a foreign depository and 10 indirect links via an international depository (Clearstream Banking Luxembourg, Euroclear Bank) or a custodian bank (Bulgaria). KDPW has both a direct and an indirect link with Slovakia. 8

9 Trade Repository A trade repository is a set of information which fulfils the requirements of the Regulation of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories. The KDPW Trade Repository became operational on 2 November It operates under the Trade Repository Rules. 14 November 2013: KDPW_TR was registered by ESMA as one of the four first regarded TRs. 9

10 Registered TRs in UE (as of ) 1. DTCC Derivatives Repository Ltd. (DDRL) 14 November Krajowy Depozyt Papierów Wartościowych S.A. (KDPW) 14 November Regis-TR S.A. 14 November UnaVista Limited 14 November CME Trade Repository Ltd. (CME TR) 5 December ICE Trade Vault Europe Ltd. (ICE TVEL) 5 December

11 LEI Assigning On 19 August 2013, KDPW has been assigned a prefix (2594) necessary to assign identifiers future LEI to legal entities. According to the provisions of regulations delegated under EMIR, a relevant identifier is necessary in order to report derivative trades to a trade repository. The prefix has been assigned by the ROC Secretariat (Regulatory Oversight Committee Secretariat) and will identify codes assigned by KDPW in the global LEI system (GLEIS). The KDPW prefix has been requested by the Polish Financial Supervision Authority, which acts as a sponsoring authority in the process of ROC s authorisation of a local unit as an LOU (pre-lou) within the global LEI system. 11

12 About KDPW_CCP KDPW_CCP operates as a CCP (central counterparty) within the meaning of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, performing the clearing of transactions executed in the cash and derivatives markets, both in on-exchange and offexchange (OTC) markets. In accordance with KDPW_CCP regulations (the Rules of Transaction Clearing (Organised Trading) and the Rules of Transaction Clearing (Non-Organised Trading)) KDPW_CCP becomes the counterparty for all transactions accepted for clearing. This is performed using the mechanism of clearing novation, introduced on the basis of the Law on Trading in Financial Instruments. 12

13 KDPW_CCP Milestones 2009 New Development Strategy of KDPW 2010 Creation of KDPW_CLEARPOOL Clearing Guarantor first step to CCP 2011 Establishing of KDPW_CCP clearing house: Separate legal entity New clearing guarantee system SPAN CCP s own capital July Introducing novation to the Polish legal system Introduction of OTC clearing service Nov Application for authorisation 2014 EU Authorisation of KDPW_CCP

14 Authorised CCPs in UE (as of ) No. CCP Country Date 1 Nasdaq OMX Clearing AB Sweden European Central Counterparty N.V. Netherlands KDPW_CCP Poland Eurex Clearing AG Germany Cassa di Compensazione e Garanzia S.p.A. Italy LCH.Clearnet SA France European Commodity Clearing Germany LCH.Clearnet Ltd United Kingdom Keler CCP Hungary CME Clearing Europe Ltd United Kingdom CCP Austria, Abwicklungsstelle für Börsengeschäfte GmbH Austria LME Clear Ltd United Kingdom

15 Main Responsibilities of KDPW_CCP Clearing Regulated Market ATS Derivative OTC REPO OTC Risk Management SPAN VaR Collateral Management PLN Govt. Bonds T-Bills WIG20 Companies 15

16 KDPW_CCP - Markets & Products CASH MARKET DERIVATIVES MARKET Regulated ATS OTC Regulated OTC - Warsaw Stock Exchange (WSE) - BondSpot - NewConnect - Catalyst - BondSpot - Matching Engine for REPO - Warsaw Stock Exchange (WSE) - OTC (MarkitWire, SWIFTAccord) shares, bonds, subscription rights, allotment certificates, investment & structured certificates, index participation units, mortgage bonds, warrants, ETFs shares, allotment certificates, bonds, mortgage bonds T-bonds futures contracts, options, index participation units Forward Rate Agreements, Interest Rate Swaps, Overnight Index Swaps, Basis Swaps 16

17 Regulated Market and Alternative Trading System KDPW_CCP guarantees clearing of transactions executed on the regulated cash and derivatives market. Regulated cash market trading platforms Regulated derivatives market trading platform KDPW_CCP guarantees clearing of transactions executed on the cash market in the alternative trading system. ATS cash market trading platforms: 17

18 OTC Clearing: Cleared Instruments FRA IRS OIS Basis Swaps REPO PLN KDPW_CCP has focused on OTC derivatives denominated in PLN In the future: instruments denominated in EUR and other currencies with regard to market demand. 18

19 OTC Clearing: Confirmation Platforms KDPW_CCP clears trades on the basis of clearing instructions delivered by an electronic platform operator (MarkitWire, SWIFT Accord or proprietary matching solution for REPO). MarkitWire SWIFT Accord 19

20 Reporting to Trade Repository In addition to compliance with its reporting obligations as a CCP, KDPW_CCP has developed the service of reporting derivative contracts to the Trade Repository operated by KDPW (KDPW_TR) on request of Clearing Members. Reporting can be delegated both by Clearing Members and through them by their Clients and entities concluding derivative transactions on request of their Clients (Brokers). On 7 November 2013 The European Securities Market Authority (ESMA) has registered the KDPW Trade Repository, confirming that it fulfills all trade repository requirements under EMIR. The KDPW Trade Repository (KDPW_TR) was one of the first four such institutions to be registered in Europe. KDPW_TR is approved to register all derivative contracts classes, both from the regulated and OTC market. 20

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