Poland’s KDPW_CCP has signed agreements with SWIFT and MarkitSERV, which will be sending instructions for clearing OTC derivatives trades to the central counterparty’s systems.
Banks trading in OTC derivative instruments with other banks will match their trades using SWIFT’s or MarkitSERV’s platform, before instructions are sent to the central counterparty (CCP). Trades cleared through KDPW_CCP will be covered by a multi-tier guarantee system ensuring safety of clearing.
“Under the signed agreements, participants of OTC trade clearing – local and international banks – will get business and communication solutions necessary to participate in clearing of OTC instruments via KDPW_CCP,” said KDPW_CCP CEO Iwona Sroka.
According to the timetable, the new clearing service will be available to participants as of January 2013. In the first phase, KDPW_CCP will clear forward rate agreements, interest rate swaps cleared in Polish zloty, and repos. From January 2014 onwards, further classes of OTC instruments will be cleared: FX swaps, FX options, interest rate options, currency interest rate swaps.
Alain Raes, chief executive, EMEA, SWIFT, says: “We are delighted that KDPW_CCP has chosen to offer its customers the opportunity to match OTC derivatives instructions and send standardised clearing messages using our Accord matching application. By choosing this option, KDPW_CCP’s members can take advantage of SWIFT’s industry standard messaging and its matching solution to further reduce risks and costs by reusing their existing SWIFT connection and using a straightforward product that has already seen encouraging adoption rates in the Polish market.”
“Worldwide, MarkitSERV is now connected to more than ten CCPs for clearing CDS, interest rate swaps, equity derivatives and foreign exchange. Providing our clients with a single point of access to multiple clearing houses and reporting repositories is an important part of how we are helping the financial industry adapt to changing market structures brought on by regulation and the need to mitigate risk,” added Jeff Gooch, CEO of MarkitSERV.
The agreements signed are another step in the implementation of a project of launching the clearing of selected OTC instruments and repos in preparation for the European market infrastructure regulation, which will require the clearing of selected classes of OTC instruments via a CCP and the reporting of trades to a trade repository.
MarkitSERV, which is operated by financial information service provider Markit, combines electronic trade confirmation, position reconciliation and related workflow platform to provide a gateway for OTC derivative transaction processing.
Reporting by Janet du Chenne, Global Custodian, an Asset International publication.