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National Depository for Securities (KDPW)
2
Overview of the Polish Capital Market
National Depository for
Securities (KDPW)
National Depository for
Securities (KDPW)
Polish Financial Supervision Authority (KNF) Polish Financial Supervision Authority (KNF)
MarketsMarkets
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 – history & ownership
1991 – 1994: An integral part of the Warsaw Stock Exchange 1994 – Present : Independent joint - stock company 1997 – Clearing of derivatives 1998 – Multilateral cash netting for exchange and non-exchange
market 2002 – RTGS introduced 2003 – First foreign shares listed and settled 2009 – New Depository Clearing & Settlement System (NSDR)
Current shareholders (since 1999) The State Treasury - 1/3 The Warsaw Stock Exchange - 1/3 The National Bank of Poland - 1/3
4
Main KDPW Responsibilities
Custody of all securities admitted to trading following public issue
Reconciliation and monitoring
Clearing and settlement of transactions executed on regulated markets: the Warsaw Stock Exchange and BondSpot; and outside the regulated markets (New Connect, MTS-Poland)
Processing of corporate actions
Assigning ISIN codes for Polish issues (National Numbering Agency)
Risk management –management of:
Settlement Guarantee Fund covering regulated markets & ATS Collateral system for derivatives, Collateralisation of security loans in automatic securities lending -
borrowing system
5
Other KDPW Responsibilities
Additional Services: Management of the Investor Compensation Scheme
For the Polish Social Security System: Transfer payments between open-end pension funds Management of the Pension Guarantee Fund
Other: Membership of European and international associations and working
groups Education, promotion, sponsorship
6
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) 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
7
Basic principles of Clearing and Settlement
All securities settled in KDPW are dematerialised and transfers are made by book-entry between KDPW participant accounts Mandatory asset segregation (own assets, client assets)
Change of ownership at the moment of book-entry in securities account DvP Settlement model:
BIS model I, BIS model II Settlement :
T+2, T+3 - for regulated - market trades – SE, Bond Spot T+0 to T+n - for non-regulated market transactions – OTC
Two settlement channels: RTGS DVP 8.00-17.00, FOP 8.00-18.00 Multiple batch system 7.30-19.00
Cash leg settlement CBM - in the National Bank of Poland for PLN and Euro CLB for other currencies
Settlement liquidity facilities securities L&B automatic and on-request repo buy-in, sell-out
Number of investement accounts operated by KDPW Participants
8
KDPW in Figures - January 2010
Number of KDPW Participants, Including: 72
Resident participants71
• Brokerage houses23
• Bank15
• Other33
Non –resident participants
1
• Other 1
Issuers589
Foreign issuers36
Domestic issuers553
KDPW in Figures (2)January 2010
Capitalisation
Securities
842 599 505 490 PLN
Shares
399 664 970 568 PLN
- Domestic issuers
388 452 691 981 PLN
-Foreign issuers
112 122 785 87 PLN
Investement certificates
910 014 353 PLN
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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
19.00
RTGS
8.00
Technical
DVPFOP
FOP
FOP
Technical
17.00
18.30
DVPFOP
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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
Links with foreign CSDs
EVK
Euroclear Sweden
Links created with foreign CSDs (FOP links) in connection with the dual listing of shares on the WSE. More FOP and DVP links planned.
Basic principles of dual listing
• Foreign shares quoted on WSE in PLN• Clearing and settlement in KDPW in PLN• Dividends paid to Polish shareholders in foreign
currency• Transaction finality – entry on the participant’s
KDPW account• Shares need to be registered on KDPW account in
foreign CSD to be traded on the WSE• The transfer may be settled intra-day (RTGS in
KDPW)
Principles of KDPW cross-border linksFree of Payment transfers
The links work on a Free of Payment (FOP) basis,
which means that securities will be transferred without
a corresponding transfer of cash.
The links may in future be upgraded to a bilateral DVP
link, once a relevant business case has been identified
and the appropriate legal conditions have been met.
Links with foreign CSDs
No CSD Country Type of link Company* Year of opening
1. KELER Hungary Indirect MOL 2004
2. EVK Estonia Direct Olimpic Entertainment GroupSilvano Fashion Group
2007
3. OeKB Austria Direct WARIMPEXImmoeast
20032007
4. CDCP Slovakia Direct Asseco Slovakia 2007
5. Clearstream Frankfurt
Germany Indirect– CBL** bmp 2004
6 Monte Titoli Italy Indirect – CBL Unicredito Italiano 2007
7. DTC USA Indirect– CBL CEDC 2006
8. SCP Czech Republic
Indirect – CBL CEZ 2006
9. Euroclear France
France Indirect– CBL
Indirect – EB ***
ORCO
Belvedere
2007
2008
10. Euroclear UK & IR
UK Indirect – EB Atlas EstatesPlaza Centres
2008
11. Euroclear Sweden
Sweden Indirect - EB Reinhold 2007
* ** Clearstream Banking Luxembourg *** Euroclear Bank
Plans for the future
Romania (Indirect)
Canada (Indirect)
2010
KDPW Vision
Build a robust capital group by 2013:
• Anticipate competitive challenges;
• Build a service portfolio based on state-of-the-art, innovative
technologies and solutions creating value for capital market
participants;
• Support the development of a regional centre in Warsaw in
active co-operation with other Polish and foreign market
participants with KDPW as the main depository-settlement
institution in Central and Eastern Europe
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KDPW Strategic Goals
(1) Introduction of a new KDPW business model
(2) Positioning KDPW as the leading CSD and clearing house in the CEE region
(3)KDPW integration with European infrastructures
(4) Introduction of new services to increase the value of the KDPW capital group
(5) Raising the standard and scope of services currently provided
(6) Optimisation of the KDPW capital group business processes
(7) Improving the input and skills of KDPW capital group personnel in order to meet the strategic goals
(8) Promoting the KDPW capital group corporate image and products and services through enhanced corporate communication
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www.kdpw.pl