Polish clearinghouse KDPW_CCP has cleared the first over-the-counter (OTC) trades denominated in Polish zloty (PLN) between Citi Handlowy and mBank, officials say.
The launch of KDPW_CCP’s OTC derivatives and repo clearing service was mandated by the European Market Infrastructure Regulation (EMIR), according to which all OTC trades of certain derivatives must be cleared by an authorized CCP. KDPW_CCP was authorized by EU authorities in April 2014.
“The main advantage of clearing OTC derivatives in a CCP clearing house is the safety and guarantee of clearing supported by the functionalities of the clearing house where the CCP takes over the role of each counterparty through novation and relies on a multi-tier clearing guarantee system and risk management systems,” says Iwona Sroka, CEO and President of KDPW_CCP and KDPW, in a statement.
Hans-Dieter Kemler, vice-president of the management board for financial markets, mBank, adds that the “clearing of liquid OTC derivative trades, important to the financial markets, in a central counterparty clearing house is a key pillar of the financial market reform and will soon be mandatory in the EU member states.
“As one of the most active Polish banks trading in derivatives, mBank has always supported the concept of creating a local clearing house focusing on the clearing of instruments relevant to the local market and developing its service in close co-operation with the market,” Kemler says. “In view of the coming supervisory recommendation on central clearing of PLN interest rate derivatives, we believe that KDPW_CCP can handle the vast majority of such trade between Polish banks and in the future add active foreign banks to its pool of participants.”
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