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Settlement Agent

Settlement Agent. Settlement Agent. Settlement Agent. General provisions. Addressees of the new functionality : Foreign clearing members (CM) Beneficiaries : Foreign CM and entities playing the role of Settlement Agents Purpose :

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Settlement Agent

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  1. Settlement Agent

  2. Settlement Agent Settlement Agent General provisions Addressees of thenewfunctionality: Foreign clearing members(CM) Beneficiaries: Foreign CM and entitiesplayingthe role of SettlementAgents Purpose: To enable foreign investment firms to apply for KDPW_CCP CM status withouthaving to open and maintain a KDPW account.  separation of clearing and settlement

  3. Settlement Agent Mainprinciples (1) Settlement Agent (SA) KDPW directparticipant (participationtype: representative/settlement agent) authorised to operate a securities accout, a derivative instruments accountor a depositoryaccount CM’s financial instruments areregistered and CM’stransactionsaresettledin KDPW depositoryaccountoperated by thesettlement agent. Settlement agent performsthefunction of payer bank for CM orindicates to KDPW an entitywhichperformsthisfunction for CM – itperformscashsettlement of CM’stransactions; SA and CM mustindicatethe same payer; theSettlement Agent mayindicateanotherdefaultpayer for itsotherfunctions Liable for taxissues – thefinalresponsibility for coveringtaxcosts to be definedinthebilateralagreementbetween SA and CM.

  4. Settlement Agent Settlement Agent and Clearing Member SA and CM market position instructions Securities, margins

  5. Settlement Agent Mainprinciples (2) Foreign investment firm KDPW_CCPparticipantwith clearing member (CM) status Not a KDPW participant – cannotoperate securities accounts (need not open a branchin Poland) Signs an agreementwith one entity performing SA functionin KDPW Indicates SA account to KDPW_CCP and presents a declarationindicatingtheentity to performthisfunction and theentity’sdeclaration of consent. Payscashliabilitiesfollowingmarking-to-market. Istheonlyparticipant of thesettlementguarantee system (contributescash via thepayer bank; securities contributed to the SGS aretransferred to KDPW from CM accountoperated by SA)

  6. Settlement Agent Mainprinciples (3) Cont’d. Foreign entitysubmits an application for a participationagreement to KDPW_CCP and SA submits a representationagreementwith CM to KDPW  CM receives a participant ID within a formalaccountoperated by SA in KDPW. Entity performing SA functiondoes so under itsexisting KDPW participant ID (e.g. XXXX) whilebeing a CM account operator (e.g. YYYY)  SA managesaccounts under differentIDs (both XXXX and YYYY). Relationbetween SA and CM identifiedinthe system by means of a newtype of activity for a CM, a newtype of participant status: Representative/Settlement Agent and an agreementbetween CM and SA. CM ensuresparticipationinthe securities lending system via its SA.

  7. Settlement Agent Settlement Agent and Clearing Member SA inrelation to KDPW and CM inrelation to KDPW_CCP margins positions, DvP

  8. Settlement Agent KDPW messageflow chart Example: SA assigned to two foreign CMsre KDPW Message to inbox XXXX, but Rcvr: ZZZZ Message to inbox XXXX, but Rcvr: YYYY Messagere SA to inbox XXXX, Rcvr: XXXX SA XXXX

  9. Settlement Agent KDPW_CCPmessageflow chart KDPW_CCP Message to inboxZZZZ, Rcvr: ZZZZ Message to inbox YYYY, Rcvr: YYYY

  10. Settlement Agent Timetable Nextprojectphases By 04.03.2011 – request for preliminarydeclaration of KDPW participants’ interestin performing theSettlement Agent function for foreign Clearing Membersin order to participateintests 2nd half of March 2011 – testswithparticipants Implementation of the SA functionalitywhenKDPW_CCPgoes live

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