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January 5, 2012

Polish CCP KDPW targets Q4 2012 for OTC Clearing

Their summary below from this page here, news coverage here. I wonder if the economic business case works in Poland better than Japan, Canada or Australia – small volumes with a complex implementation means a long payback period for the investment.

KDPW_CCP OTC clearing

The proposed Regulation of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories introduces mandatory clearing of OTC transactions in derivatives subject to potential standardisation via CCPs.The advantages of CCP clearing of OTC transactions include the security of the solution and the guarantee of clearing of transactions thanks to CCP functionalities such as the CCP being a party to each transaction, a multi-tier clearing guarantee system, as well as risk management mechanisms
The key advantage of the project is that banks can release credit limits set for counterparties and lower capital requirements for counterparty risk, which may improve liquidity on the market. In addition, the STP model will be put in place thanks to process standardisation and automation, reducing operational risk and enhancing efficiency.

Given the existing structure of the Polish capital market, only KDPW_CCP may aspire to set up a CCP and ensure safe, state-of-the-art solutions based on its clearing technology, system of communication with banks, and clearing in PLN and EUR.

The project phase involving the preparation of detailed concept documentation including the clearing model, the risk management model, the list of cleared instruments and their validation model, was completed at the end of March 2011. The complete documentation was developed through effective project co-operation between KDPW_CCP and the banking community.

KDPW_CCP has now initiated the Design Study phase with the selected IT system vendor.

Target date: Q4 2012


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