Polish clearing house KDPW_CCP is testing the kdpw_otc system to support the clearing of OTC trades.
The production roll-out of the service will take place following the publication and entry into force of the transaction clearing rules for non-organized trading drafted by KDPW_CCP.
The service will be offered mainly to Polish banks which trade in OTC derivatives and repos, but KDPW_CCP also aims to attract London-based institutions trading in instruments denominated in the Polish zloty.
The latest development ends a two-year period of preparations for the implementation of the inter-bank market derivatives clearing service in KDPW_CCP in co-operation with Polish banks. The solution will be available on the entry into force of the Transaction Clearing Rules and the conclusion of agreements with clearing members, said KDPW_CCP President and CEO Iwona Sroka.
In the first step, in 2012, the clearing house KDPW_CCP will offer the clearing of trade denominated in the Polish zloty in forward rate agreements, interest rate swaps, overnight index swaps, basis swaps, and repos (in Polish Treasury bonds). As of 2014, the clearing house will also offer the clearing of derivatives denominated in other currencies.
Counterparties trading in derivative instruments on the OTC market confirm trade on one of two confirmation platforms (MarkitWire or SWIFT Accord), which subsequently send clearing instructions to the clearing house. KDPW_CCP performs novation and clearing of trade using the kdpw_otc system. Sending a trade for clearing in KDPW_CCP means that the trade is covered by a multi-tier clearing guarantee system which ensures safety of payment by the counterparties, said Sroka.
(JDC)