. National Depository for Securities (KDPW) Warsaw, 25 October 2011
Dec 21, 2015
.
National Depository for Securities (KDPW)
Warsaw, 25 October 2011
2
Overview of the Polish Capital Market
National Depository for Securities (KDPW)
KDPW_CCP
National Depository for Securities (KDPW)
KDPW_CCP
Polish Financial Supervision Authority (KNF) Polish Financial Supervision Authority (KNF)
Markets
Warsaw Stock Exchange, Bondspot, Catalyst,
New Connect, OTC
Markets
Warsaw Stock Exchange, Bondspot, Catalyst,
New Connect, OTC
Financial institutions & Intermediaries
Financial institutions & Intermediaries IssuersIssuersInstitutional
investorsInstitutional
investors
Individual investors
Individual investors
National Bank of Poland
(Clearing Bank)
National Bank of Poland
(Clearing Bank)
3
KDPW – Introduction
Responsibilities:
Central securities depository Clearing house Settlement Custody Risk management
Clients:
Issuers (foreign & domestic) Intermediaries (custodian banks & brokers)
4
KDPW – Ownership
1991 - 1994 An integral part of the Warsaw Stock Exchange
1994 - PresentIndependent joint - stock company
Current shareholders
KDPW (CSD) - (since 1999) The State Treasury - 1/3 The Warsaw Stock Exchange - 1/3 The National Bank of Poland - 1/3
KDPW_CCP - (from 1 July 2011 ) KDPW - 100%
5
Main KDPW Responsibilities
KDPW_CCP Clearing of transactions executed on:
Regulated markets: Warsaw Stock Exchange, BondSpot Non-regulated markets: New Connect, Treasury BondSpot-Poland, OTC
Risk management –management of: Settlement Guarantee Fund covering regulated markets & ATS Margaining for cash and derivatives market Collateralisation of security loans in automatic securities lending - borrowing
system
KDPW (CSD) Safekeeping and custody of all securities admitted to trading following public issue Reconciliation and monitoring Asset management Settlement of transactions executed on:
Regulated and non-regulated markets OTC
Processing of corporate actions Assigning ISIN codes for Polish issues (National Numbering Agency)
Separation of functionality between KDPW CSD and KDPW_CCP
6
Clearing of guaranteed
trades
KDPW (CSD)
Risk Management
Safekeeping
KDPW_CCP
Settlement
Collateral Management
Corporate Actions
Asset Management
Database Administration
7
Securities registered in KDPW
All securities admitted to trading in the regulated market must be registered in KDPW
Currently, the following securities are recorded in the KDPW system: Shares (foreign and domestic) Bonds (Treasury, Central Bank, Corporate, Municipal, Convertible, EIB,
with priorities rights, non-public bonds, mortgage bonds) Exchange Traded Funds (ETFs) Investment Fund Certificates Derivatives
Futures Contracts (WIG20 index, currency, share) Index Participation Units Options (European style), (WIG20 index, share)
Exception: Treasury bills - custody, clearing and settlement in the National Bank of Poland system
8
Capitalisation of securities
Capitalisation of shares, bonds and other securities registered in KDPW (bln. EUR)
12-2002 12-2003 12-2004 12-2005 12-2006 12-2007 12-2008 12-2009 12-2010 09-20110
20
40
60
80
100
120
140
shares bonds other securities
EU
R b
ln
9
Regulated market trades turnover
Regulated market cash and derivatives turnover(bln. EUR)
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011.01 - 2011.09
0
20
40
60
80
100
120
140
160
cash market derivatives market
EU
R b
ln (
sin
gle
co
un
t)
10
OTC trades turnover
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011.01 - 2011.09
0
500
1,000
1,500
2,000
2,500
interbank transactions repo transactions - between the NBP and a bank
Treasury BondSpot Poland transactions Alternative Trading System
EU
R b
ln (
sin
gle
co
un
t)
11
Number of transactions settled
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011.01 - 2011.09
0
2
4
6
8
10
12
14
16
18
20
derivatives market cash market
Mili
on
s (
sin
gle
co
un
t)
12
Foreign investors in Polish market (share of cash market turnover) – Stock Exchange (H1 2011)
Foreign investors in Polish market (ownership) – Treasury bonds (August 2011)
Foreign investors in Polish market
Source: Warsaw Stock Exchange
Source: Polish Ministry of Finance
121.5 billion EUR
18%
34%
48%
Individual investors
Institutional investors
Foreign investors
30%
70%
Foreign investorsDomestic Investors
36.3 billion EUR
13
Clearing & Settlement
The National Depository for Securities (KDPW)
Clearing & Settlement (until Q1 2011)
14
Trade execution
Clearing & Settlement
Markets (regulated & OTC)
Clearing
Guarantee system KDPW_CLEARPOOL
Settlement
Custody Central Bank system
Clearing & Settlement (from July 2011)
15
Trade execution
Clearing
Markets (regulated & OTC)
Clearing
Risk Management systemKDPW_LEARPOOL
Settlement
Custody
Central Bank systemSettlement
16
Basic principles
All securities cleared and settled in KDPW are dematerialised All securities transfers are made by book-entry in KDPW depository, clearing
& settlement system Transfers are made between KDPW participant accounts
- Mandatory asset segregation (own assets, client assets) Change of ownership at the moment of book-entry Clearing & Settlement service for transactions from:
- WSE, BondSpot, New Connect (ATS), Treasury BondSpot Poland DvP Settlement model:
- BIS model I, BIS model II Settlement :
- T+2, T+3 - for regulated - market trades – SE, BondSpot- T+0 to T+n - for non-regulated market transactions – OTC
Two settlement channels:- RTGS DVP 8.00-17.00, FOP 8.00-18.30- multiple batch system 7.30-18.45
17
Daily settlement schedule : multibatch and RTGS 6 settlement sessions a day with intra-day finality
after each session
Basic principles
BATCHES
7.30
10.30
13.00
15.30
18.30
18.45
RTGS
8.00
Technical
DVPFOP
FOP
FOP
Technical
17.00
18.30
DVPFOP
18
Cash leg settlement Central Bank Money - in the National Bank of Poland for
PLN and Euro Commercial Bank Money for other currencies
Settlement liquidity facilities securities L&B automatic and on-request repo buy-in, sell-out transactions from regulated market guaranteed by the
Settlement Guarantee Fund, by the collateral system (for derivatives only) and KDPW_CCP
transactions from ATS (unregulated market) guaranteed by special ATS guarantee fund
Basic principles
19
Cash settlement side (CBM)
Agreement between Central Bank (CB) and KDPW
Authorisation for KDPW to debit Payment Bank (PB) accounts
Cash Settlement on PB accounts in CB
Payment banks: banks having status of KDPW participant and holding
cash account in CB PAYMENT SYSTEM
Payment bank responsible for settlement of:
its own and its clients transactions
transactions executed by Clearing Members (CMs) which are not
allowed to have a cash account in CB
KDPW informs PB about net cash positions to be paid on S
KDPW sends payment instructions to CB using CB interface
20
KDPW in the Polish capital market
Seller Buyer
Trade feed = Already matched for settlement
Cash accounts of the seller/ seller’s custodian cash clearer
in NBP
Cash accounts of the seller/ seller’s custodian cash clearer
in NBP
Cash accounts of the Buyer/ buyer’s custodian
cash clearer in NBP
Cash accounts of the Buyer/ buyer’s custodian
cash clearer in NBP
Trade Trade
Trade execution
MarketsMarkets
Trade execution
Post-trading processing flowPost-trading processing flow
Securities accounts of the Seller / seller’s
custodian
Securities accounts of the Seller / seller’s
custodian
Securities accounts of the Buyer /
buyer’s custodian
Securities accounts of the Buyer /
buyer’s custodian
21
Life cycle of settlement instruction
INPUT VALIDATIONCLEARING
(KDPW_CCP)
T S
Locked-in TRADES
WSE
BondSpot
New Connect
INPUT
INPUT
TRADES
Treasury BondSpot
Poland
POST- TRADE SETTLEMENT
MATCH
ING
MATCHING
VALIDATION
VALIDATIONOTC
INSTRUCTIONS
ST+2T+3
T+2T+n
T+n
Bilateral cancellation
Unilateral cancellation
T
MATCHING
VALIDATION
INPU
T
INSTRUCTIONS
INSTRUCTIONS
S
SETTLEMENT
CLEARING SETTLEMENT
CLEARING SETTLEMENT
Order that funds in the guarantee system are initiated in KDPW_CCP
22
Guarantee Fund
TotalKDPW_CCP
capital:PLN 100 million
23
kdpw_stream – System architecture - August 2009
Processing of cash market
Data flow
Processing of derivatives
market
External communication
Risk module Asset Management
Transfer payments
Collateral register
Corporate actions
Static data
RTGSMB
Clearing banks
MarketsParticipants
WWW SWIFT
24
Cross Border Settlement
The National Depository for Securities (KDPW)
Links with foreign CSDsLinks created with foreign CSDs (FOP links) in connection with the dual listing of shares on the WSE. Currently there are 8 direct links and 9 indirect links into 20 foreign markets
EVK
Euroclear Sweden
26
Principles of cross-border transfers
• Transfer executed between investor’s account in one country and the same investor’s securities account in the second country before trading can take place – there is no change of ownership,
• Shares need to be registered on KDPW account in foreign intermediary to be traded on the WSE,
• Transfers are free of payment (FOP),• Foreign shares quoted on WSE in PLN,• Clearing and settlement in KDPW in PLN,• Dividends paid to Polish shareholders in foreign currency or PLN
following f/x conversion,• Transfer based on SWIFT (ISO 15022 messaging standards),• The transfer may be settled intra-day (RTGS in KDPW).
27
Free of Payment cross-border links between KDPW and foreign CSD – Share transfer
Transfer of shares prior to a Warsaw Stock Exchange transaction executed between a Polish and foreign investor using a FOP link
Foreign investor wishing to sell shares on the
Warsaw Stock Exchange
Entity managing foreign investor’s securities account in Poland
Instruction to receive shares
Instruction to receive shares
Investor’sAccount
KDPWAccount
Foreign CSD Instruction to receive shares FOP (MT540)
Transfer order
1
2
3
45
Instruction to delivershares FOP
6 Transfer of shares to KDPW omnibus account following matching
Receive FoP Transfer confirmation (MT544)
7
Matching of instructions (1&4) in Foreign CSD
Strategy 2010 - 2013
National Depository for Securities (KDPW)
28
29
KDPW Group corporate values
Innovation in technology and operations with the aim of introducing new services,
providing a rapid response for to the needs of the
market while providing cost efficient clearing and
settlementReliability built on its daily business operations that grow the Polish financial
market
Compliance with international clearing and
settlement standards and a world class IT infrastructure
Efficiency ensuring the safety, business continuity, high standards and timely execution of clearing and
settlement services
30
KDPW Group – Strategic Goals
(1) Strengthening the new KDPW Group business model
(2) Positioning the KDPW Group in the region and
integration with European infrastructures
(3) Introduction of new services to increase the value
of the KDPW Group
(4) Raising the standard and scope of services currently
provided
(5) Promotion and sale of KDPW Group services
31
KDPW - New Strategy, New Services
Omnibus accounts Separation of Clearing Member and Settlement Agent status Hold-Release mechanism
New services for foreign financial intermediaries:
KDPW_CCP SPAN methodology Netting in securities CCP for OTC
KDPW (CSD) Partial settlements TARGET2 TARGET2-Securities Lending and borrowing system (in cooperation with KDPW_CCP)
Other future services:
32
www.kdpw.pl/en
www.kdpwccp.pl/en