PKO Bank Polski, the largest Polish bank, has joined the clearinghouse KDPW_CCP for clearing over-the-counter (OTC) derivatives denominated in Polish zloty (PLN).
The first OTC trades in PLN were cleared through the central counterparty (CCP) in May 2015, and 11 polish banks now clear interest rate derivatives through it. KDPW_CCP has now cleared trades totalling more than PLN 24 billion (€5.6 billion).
Poland’s OTC derivatives clearing service was launched to address the European Market Infrastructure Regulation (EMIR), which mandates that all OTC trades in particular classes must be cleared in a CCP authorised by the EU.
KDPW_CCP was authorised by the EU in April 2014, and currently offers the clearing of forward rate agreements, interest rate swaps, overnight index swaps and basis swaps.
Iwona Sroka, president and CEO of KDPW and KDPW_CCP, said: “The services of an authorised CCP improve the security of the national financial system and the security of each bank. The credit risk of a counterparty to an original trade is taken over by the CCP, which operates an EMIR-compliant system of trade clearing guarantees in the event of default of a direct participant.”
She added: “We expect that active participation of PKO Bank Polski will spark the growth of the Polish interbank market as the bank is one of the leading market players.”
Jakub Papierski, vice president of the management board supervising corporate market and investment banking at PKO Polski, said: “Trade clearing in KDPW_CCP is yet another step in building shareholder value. With the central clearing functionality, our bank reduces capital requirements, mitigates clearing risk and counterparty credit risk, and fulfils all regulatory requirements which are now European in scope.”
“I do believe that the new form of clearing for the biggest local bank in a Polish CCP directly supports market liquidity, transparency and depth, and consequently enhances confidence in the quality of the interbank market in Poland.”
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