KDPW launch a sign of Polish progress
Warsaw-based Polish central securities depository (CSD), KDPW, has launched a negotiated securities lending and borrowing system in co-operation with KDPW CCP, the country’s central clearing counterparty. The system is designed to prevent or eliminate suspension of settlement of transactions and ensure the return of securities loaned in the automatic lending system, writes Neil Ainger.
System participants will be able to conclude securities loans and ensure their comprehensive processing, including loan management, clearing and settlement from the conclusion of an agreement through to the final termination of the loan. The lending system supports functions such as posting of loan requests, negotiation of loan agreement terms and the conclusion of securities loan agreements.
Securities loans in the system can be concluded for a fixed term or not. Parties to a loan are mutually anonymous. The lender and the borrower are mutually anonymous both prior to the conclusion of a loan agreement and within its term.
The launch is the latest example of Poland’s journey from an outmoded and inadequate payment, clearing and financial system in 1989 towards the modern financial infrastructure it has today. This was the theme of a roundtable during Sibos. Piotr Wiesiolek, first deputy president at the country’s central bank, Narodowy Bank Polski (NBP), said: “Everything changed. We went from state ownership to private companies. From having no payment clearing systems, independent central bank or proper supervision, to having a modern infrastructure.”
Adam Tochmanski, director of the payment system department at NBP detailed the transition the country had made from its initial paper-based SORB and SXBIR high- and low-value payment systems to the current Express Elixir immediate payments solution. Launched in 2013, it was the second such faster payments infrastructure in the world and the second iteration of Poland’s Elixir Step1 euro payments system, which was introduced soon after the country joined the euro. Joining the Target-2 euro system via NBP was also a vital step in the modernisation journey, said Tochmanski.
Poland’s history in establishing a CSD, CCP and its new capital markets infrastructure was addressed by Iwona Sroka, president and chief executive of KDPW. “We’ve come a long way,” said Sroka, adding that a new trade repository structure was now in place in time for the relevant European Market Infrastructure Regulation (Emir). Moreover, a common legal entity identifier system was also now a reality – a feat unmatched by many other countries. Poland can be said to have leap-frogged over many other developed nations in its financial and technological upheavals since independence, avoiding many of the silos and legacy traps with which other European nations now struggle.
Mieczyslaw Groszek, vice-president of the Polish Bank Association, pointed up that in 1989, immediately after independence; there were initially only nine Polish commercial banks. Today the country has 39. “There were no payment cards 25 years ago either; nor any mobile payment and modern ACH infrastructure as there is now, so you can see how far we’ve come,” he said. Progress in this area has been significant, with 90 per cent of Polish payment cards chip-based and 60 per cent contactless; 30 per cent of all card transactions on the country are now contactless. “Compared to a country such as the US, we are now one of the most advanced countries in the world in this respect,” said Michal Szymanski, vice-president of Krajowa Izba Rozliczeniowa, one of Poland’s largest payment processors.