POLAND: Treasury BondSpot clearing of bonds through the Central Clearing Counterparty (KDPW_CCP)


The Polish financial market has put in place a significant change last year with regards to local infrastructure, with the introduction and implementation of obligatory clearing through KDPW_CCP, the Polish Central Counterparty, for all single leg buy and sell transactions executed on the Treasury BondSpot platform which is owned by the Warsaw Stock Exchange.

Participants of Treasury Bondspot are made up of 28 local and foreign banking institutions, among which 13 are authorised Primary Dealers (such as Societe Generale SA Branch in Poland).

“On the 5th of October 2020, KDPW_CCP, in cooperation with Treasury Bondspot, successfully initiated clearing for outright transactions executed on this platform”, stated the Managing Director of KDPW_CCP Marcin Truchanowicz.

The application of this central clearing mechanism allows for the full anonymity of executions in this segment and mitigates the systemic risk significantly. It also unburdens our participants with counterparty risk and associated limits. Societe Generale Securities Services Poland has been one of the first to implement this new service.

As a result, SGSS Poland has been able to extend its service, beyond the clearing of Equity Traded Derivatives and cash equities with KDPW_CCP, to this asset class. As a Global Clearing Member (GCM), SGSS Poland is a direct participant of KDPW_CCP, providing services to its clients (Remote Brokers of the Warsaw Stock Exchange and other intermediaries) operating in Poland. Derivatives services from Societe Generale in Poland have been operational for almost 20 years and the majority of the foreign intermediaries present in Poland are existing clients of Societe Generale.

Every transaction cleared in each segment requires collateralisation with intraday and overnight margins using the SPAN1 methodology. Additionally, the risk of insolvency of GCMs is covered by the Guarantee Fund, which is also updated on a daily basis.

The success of this initiative is particularly notable given the extremely challenging working environment throughout 2020 in the context of the pandemic, as we were experiencing limited direct links among employees and interactions between the teams. In spite of this complex global situation, we have proven to be a reliable partner and a highly dedicated service provider for our clients, leveraging on the strong motivation and professionalism of the entire SGSS Poland team.

Our challenge in 2021 will be to promote this new clearing capacity among other Treasury BondSpot participants and to develop the bonds clearing service for a new client that we are currently onboarding, whose activities include the role of Primary Dealer in Poland.

Local infrastructure is also looking ahead: the new project in this field, to be implemented in 2022, is optional CCP2 clearing for Treasury BondSpot traded REPO3 deals, which will be encouraged by the Polish authorities with the possible exemption from the Banking Tax.

As underlined by Marcin Truchanowicz, “KDPW Capital Group as well as locally present banks operating in treasury bonds segment like Societe Generale, actively support the implementation of guidelines as defined in the Strategy for Development of the Polish Capital Market, which improve safety, transparency and liquidity of our market and which therefore make it more attractive to global investors. We are looking forward to our further cooperation in implementing new clearing services”.

Article written by Marek Rudnik, Head of Societe Generale Securities Services Poland.

1Standard Portfolio Analysis of Risk
2Central Clearing Counterparty
3Sale and Repurchase Agreement