KDPW_CCP has filed an application with the Polish Financial Supervision Authority for the authorization of the clearing house under EMIR, which includes single requirements for clearing houses in the EU. The authorization will allow parties required to clear specific classes of OTC derivatives to fulfill the obligation.
“The key modifications which we have put in place in the clearing house and in its legal environment included our efforts to introduce novation into the Polish legal system, to increase the own capital of KDPW_CCP adequate to the size of the served markets, to change the default system waterfall and to set up a Risk Committee,” said KDPW_CCP president and CEO Iwona Sroka.
The introduction of novation into the Polish legal system allows the clearing house to take over the rights and obligations of the original counterparties to a trade upon its acceptance for clearing, thus taking over a material part of investment risks involved in potential default of a trade party. KDPW_CCP also offers the service of clearing derivatives from the interbank market; the obligation to clear specific classes of such derivatives in a CCP clearing house is imposed by EMIR.
In preparation for the authorization, KDPW_CCP has increased its own capital to PLN 209.5 million ($62.95 million), an important step in the implementation of the KDPW_CCP service for the banking sector and in the preparation for the status of qualifying CCP under the Capital Requirements Directive (CRD).
The Risk Committee set up by KDPW_CCP provides opinion and advice on all matters which could impact risk management, as well as transaction clearing rules. It is comprised of the key organizations of brokerage houses, banks and investors.
The authorization under EMIR also allows the clearing house to become a qualifying CCP under the draft Capital Requirement Regulation (CRR). “Under CRR, central counterparties which comply with the requirements of EMIR may benefit from a reduced risk weight for trades to which they become a counterparty following novation,” said Sroka.
KDPW_CCP Applies to Become EMIR CCP
KDPW_CCP has filed an application with the Polish Financial Supervision Authority for the authorization of the clearing house under EMIR, which includes single requirements for clearing houses in the EU.