Polish clearing house KDPW_CCP will go live 19 November with clearing and guarantee services for OTC trades in derivatives and repos.
The new service is a response to market demand and the European market infrastructure regulation, which requires the clearing of standardised derivative products on the interbank market via central counterparties.
The move is in line with G20 commitments to reduce systemic risk in financial markets, and KDPW_CCP said it would lead to higher standards of safety for the clearing of OTC trades.
KDPW_CCP will clear trades in forward rate agreements, interest rate swaps, overnight index swaps, basis swaps and Polish T-bond repos. The second phase of the rollout, planned for January 2014, will cover (in Polish zloty and other currencies) FX swaps, FX options, interest rate options and currency interest rate swaps.
KDPW_CCP has signed agreements with providers SWIFT Accord and MarkitWire to deliver clearing instructions for OTC derivatives trades. Entities concluding trades can match their trades on either platform, which will then deliver instructions to the clearing house. KDPW_CCP will perform novation and clearing in its ‘kdpw_otc’ system, with the trade covered by a multi-tier clearing guarantee system ensuring the performance of counterparty obligations.
Acceptable forms of collateral for KDPW_CCP are Polish treasury bonds, Polish treasury bills, Polish zlotys and WIG20 shares. In the future, the CCP said it would also allow Eurozone treasury bonds and euros.