Securities Settlement Systems in Poland and the European Union
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The National Bank of Poland (Narodowy Bank Polski) The National Depository for Securities SA (Krajowy Depozyt Papierów Wartościowych SA) The Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie SA) Securities Settlement Systems in Poland and the European Union Warsaw 2009 Prepared by: The National Bank of Poland The National Depository for Securities SA (Krajowy Depozyt Papierów Wartościowych SA) The Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie SA) Edited and coordinated by: Beata Wróbel Karolina Nakoneczny Authors: NBP KDPW Beata Wróbel Anna Zielińska Karolina Nakoneczny Małgorzata Kapis GPW Małgorzata Pajkowska Elżbieta Budrewicz This publication is available on the following websites: www.nbp.pl, www.kdpw.com.pl, www.gpw.pl Graphic design: Edytor Serwis, tel. 022 620 39 79, www.edytor-serwis.com.pl Printing: Drukarnia NBP Published by: Narodowy Bank Polski Departament Edukacji i Wydawnictw 00-919 Warszawa, ul. Świętokrzyska 11/21 tel. 022 653 23 35, faks 022 653 13 21 ISBN 978–83–901094–6–6 A word to the Reader I would like to invite you to read this study, which has been prepared with the cooperation of three institutions, i.e. the National Bank of Poland, the National Depository for Securities (KDPW), and the Warsaw Stock Exchange. Each of those institutions plays a different but extremely important role in the fi nancial market, and each of them shares an interest in the rapid development of post-trading services in Poland, including their harmonisation with EU standards. The secure and effective operation of securities settlement systems is very important to enable the NBP to implement such tasks, as carrying out monetary policy operations, organising monetary settlements and acting for the stability of the fi nancial system. The development of this area of the capital market largely depends on the knowledge fi nancial market participants have in this respect, yet access to such knowledge is diffi cult owing to the limited number of studies on the subject available in the Polish market., I would therefore like to express my hope that this study will be of interest to all those who are involved in the development of the Polish fi nancial market and are interested in this subject matter. Adam Tochmański has worked at the National Bank of Poland since 1987; head of the Department of Banks’ Accounts in 1992 - 1998; head of the Payment Systems Department since 1998. Secretary of the Payment Systems Council at the NBP from the moment it was established. Member of the Supervisory Board of the National Depository for Securities (KDPW) since 1995. I am delighted to present you with this study, alongside the other institutions,. I hope that it will contribute to broadening the knowledge of the core post-trading processes which take place in the capital market, and to the understanding of their signifi cance for the effi cient functioning of the capital market. As one of the major institutions in the capital market infrastructure in Poland, the National Depository for Securities SA (KDPW) actively participates in measures aimed to support and develop this market. This includes getting involved in initiatives which promote issues related to its functioning and infrastructure. Those measures refl ect a deep belief that broadening the knowledge of the present and potential capital market participants is extremely important for its development. I would like to express my hope that this study will be a valuable source of information for all persons interested in the functioning of the fi nancial market. Elżbieta Pustoła has been the President of the Management Board of the National Depository for Securities SA (KDPW) since November 1994 (i.e. from the very beginning of the existence of the company). She has also been a member of the Bureau of the Coordination Committee for the Development of the Stock Exchange Trading System, a member of the Payment Systems Council and of the Capital Market Standards Development Council. Secretary of the European Central Securities Depositories Association since 25 May 2007. The youthful Polish capital market is the most dynamic market in Central and Eastern Europe. Such a position has been achieved thanks to many factors. Undoubtedly, an important role was played by the fact that the market in Poland developed in a comprehensive way, i.e. it covered the entire value chain, which included both the area of stock exchange trading, as well as the area of clearing and settlement. The Polish experience also confi rms the importance and signifi cance of knowledge and its dissemination for the development of the securities market. Irrespective of the level already achieved, knowledge of the capital market requires broadening. In particular, issues related to the clearing and settlement of securities are still commonly perceived as a mysterious topic. In the light of these refl ections, the involvement of the Warsaw Stock Exchange in the common initiative to develop this report seems obvious. The parts of the report prepared by the WSE pertain to stock exchange issues. I would like to express my hope that they have contributed to presenting a full and in-depth picture of the Polish market. dr Lidia Adamska has been holding managerial positions at the Warsaw Stock Exchange since 1994, also as head of the Strategic Planning Department. Member of the Management Board of the Warsaw Stock Exchange since June 2006. Authors Beata Wróbel has worked at the National Bank of Poland since 1999; she has been head of the Securities Settlement Systems Division at the Payment Systems Department for fi ve years now; before that, she worked at the Large- Value Payment Systems Division, also at the PSD. Graduated from the Cracow University of Economics in the fi eld of Finance and Banking, and completed post-graduate European studies at the University of Warsaw. Karolina Nakoneczny has worked at the National Bank of Poland since 2004 as a specialist in the Securities Settlement Systems Division of the Payment Systems Department. Graduated from the Faculty of Law and Administration at the University of Warsaw and from the Post-graduate Program in European Law at the University of Warsaw. Małgorzata Kapis has worked at the National Bank of Poland since 1986. She has been the head of the Securities Registration Division in the Domestic Operations Department for 14 years now. Graduated from the Faculty of Economic Sciences at the University of Warsaw. 4 Małgorzata Pajkowska has worked at the National Bank of Poland since 1986 as senior specialist at the Securities Registration Division of the Domestic Operations Department. Graduated from the Leon Koźmiński Academy of Entrepreneurship and Management in Warsaw and from the Faculty of Law and Administration at the University of Warsaw. Anna Zielińska has worked at the National Depository for Securities SA (KDPW) for 12 years now. She has been a Senior Specialist at the International Relations and Harmonisation Department since 2007; before that, she worked, among others, at the Research and Development Department of KDPW. Graduated from the Warsaw School of Economics in the fi eld Finance and Banking, and from post-graduate European studies at the University of Warsaw. Elżbieta Budrewicz has worked at the Warsaw Stock Exchange for over 10 years. Currently a Senior Specialist at the Research and Strategic Information Department; before that, she worked at the Strategic Planning Department. Graduated from the Warsaw School of Economics in the fi eld of Finance and Banking, and from Post-graduate Studies in the Valuation Method of Limited Companies at the Warsaw School of Economics. Table of contents A word to the Reader . 3 Authors . 4 List of abbreviations. 9 Introduction . 15 Chapter 1 Description of processes taking place in the capital market and of entities participating in these processes . 17 1.1. Major capital market processes. 17 1.1.1. Issue of securities . 18 1.1.1.1. Goals and benefi ts of issue . 19 1.1.1.2. The issue process . 20 1.1.2. Registration and depositing of securities. 23 1.1.3. Trading . 26 1.1.4. Clearing. 29 1.1.5. Settlement . 31 1.2. Entities operating in the capital market and their function 33 1.2.1. Issuers . 33 1.2.1.1. Issuers of shares . 33 5 1.2.1.2. Issuers of bonds . 34 1.2.2. Investors . 35 1.2.3. Investment fi rms and banks . 37 1.2.4. Trading platform operators. 38 1.2.4.1. The Warsaw Stock Exchange . 40 1.2.4.2. MTS-CeTO SA . 41 1.2.5. Clearing houses and central counterparties . 41 1.2.6. Securities depositories. 43 1.2.7. Supervisors and regulators . 45 1.2.8. Central banks. 46 Chapter 2 The history and current activity of central counterparties and securities depositories in EU Member States and in Poland . 49 2.1. The infrastructure for depositing, clearing and settling securities in the European Union – its development and current status . 49 2.1.1. The development and current role of central counterparties in EU Member States . 49 2.1.1.1. The history of establishing clearing houses and central counterparties . 49 2.1.1.2. The current role of central counterparties. 52 2.1.1.3. Regulation and oversight . 58 2.1.1.4. Trends . 59 2.1.1.5. The optimal clearing model in the EU market . 64 2.1.2. The development and current role of central securities depositories in the EU, including international CSDs. 65 2.1.2.1. The history of establishing central securities depositories . 65 2.1.2.2. The current role of central securities depositories . 68 2.1.2.3. Regulation and oversight . 77 2.1.2.4. Trends . 80 2.1.2.5. Optimal model.