1. Introduction of securities netting to cash trade clearing
Warsaw, April 2012

2. Agenda Why Netting? Netting Process Introduction Netting Mechanism
Clearing Positions
Aggregate Collateral Accounts
Reporting
Benefits of Netting
KDPW_CCP

3. Why Netting? Clearing houses which use netting: LCH Clearnet SA,
SIX x-Clear,
EMCF,
Euro CCP,
Keler.
KDPW_CCP

4. Netting Process: Introduction
Securities netting
mechanism generating a single settlement instruction (securities and cash settlement) for all credits and debits in an entity account.
Project status: target date Q3 2013
KDPW_CCP

5. Netting Process: Introduction
Introduction of securities netting on the cash market mandatory to all KDPW_CCP participants.
Cash market netting of all trades on the market covered by settlement guarantees.
Introduction of the netting mechanism in co-ordination with the introduction of the automatic partial settlement functionality.
KDPW_CCP

6. Netting Mechanism Clearing Process with Netting
KDPW_CCP

7. Netting Mechanism Settlement Process and Update of Clearing Positions
KDPW_CCP

8. Clearing Positions
Clearing positions are created on the basis of trades from the markets.
Clearing positions are defined mainly by:
Date of trade
ISIN
Participant identifier
Clearing account ID
KDPW_CCP

9. Clearing Positions: Schema of Segregating Clearing Instructions by Market: GPW, BondSpot
KDPW_CCP

10. Clearing Positions
Netting may generate the following settlement instructions – combinations of credits and debits with the Clearing House:
No.
Description
Securities
Cash 1.
Delivery of securities against payment
Delivery
Receipt
Receipt of securities against payment 2.
Delivery of securities free of payment
Net to 0
Receipt of securities free of payment 3.
Payment
Receipt of cash 4.
Delivery of securities and payment
Receipt of securities and cash 5.
Zero clearing position
KDPW_CCP

11. Aggregate Collateral Accounts
Aggregate Collateral Accounts (ZKZ) –
aggregate collateral for one or more clearing accounts will be accrued in ZKZ.
Account aggregation is determined by the attribute - owner type
KDPW_CCP

12. Schema of Aggregate Collateral Accounts
KDPW_CCP

13. Reporting
Clearing Members will be receiving from KDPW_CCP new messages in the ISO CCP Clearing standard.
Messages will contain more complete information of the trade clearing process.
KDPW_CCP

14. Reporting ISO20022 messages
Confirmation of acceptance of a trade - secl
Confirmation of cancellation of a trade – secl
List of concluded trades – secl
List of net clearing positions – secl
Notice of buy-back of securities – secl
Confirmation of buy-back of securities - secl
List of settlement debits - secl
KDPW_CCP

15. Benefits of the netting mechanism:
raised standards of the clearing process,
reduced number of instructions sent for settlement,
reduced cost of trade settlement,
Aggregate Collateral Account functionality,
reduced cost of participation in the settlement guarantee system,
reduced settlement risk.
KDPW_CCP

16. Discussion Conclusion Żaneta Skorupska-Świrska
Deputy Managing Director
KDPW_CCP S.A. E: