The Polish Financial Supervision Authority (KNF) on Wednesday approved the countrys transaction clearing rules for OTC trading. Effective Jan. 2 2013, the Polish CCP KDPW_CCP will start clearing trade in the OTC clearing system.
The OTC derivatives and repo clearing service prepares the Polish market for the upcoming regulation requiring specific classes of OTC derivatives to be cleared through CCP clearing houses. Clearing of OTC derivatives through CCP clearing houses is intended to mitigate the risk of default of trading parties.The clearing house was made available for testing the kdpw_otc system used to clear OTC trade in November 2012.
KDPW_CCP has introduced incentives for companies who join the clearing house by March 29 2013. These clearing system participants will be relieved of the fee for an entry in the register of participants (PLN 50,000; ca. EUR 12,500) and the Participation fee for the year 2013 (PLN 20,000, ca. EUR 5,000).
In the first phase, the clearing house KDPW_CCP will offer clearing of transactions denominated in Polish zlotys, including Forward Rate Agreements, Interest Rate Swaps, Overnight Index Swaps, Basis Swaps and Repos (for Polish Treasury bonds). As of 2014, the clearing house is also planning to clear derivatives denominated in other currencies.
OTC derivatives counterparties confirm trade on one of two confirmation platforms (MarkitWire or SWIFT Accord), which subsequently send clearing instructions to the clearing house. KDPW_CCP novates and clears trade in the system kdpw_otc. Sending transactions for clearing to KDPW_CCP means that the transactions are covered by a multi-tiered clearing guarantee system which ensures the safety of payment by the parties. One of the systems elements is the capital of the clearing house, which is currently PLN 200 million ca. EUR 50 million, said Iwona Sroka, CEO of KDPW_CCP.
KDPWs complementary trade repository was launched on Nov. 2 2012.
(JDC)