Information for aggrieved parties
following the declaration of insolvency of FIRST INTERNATIONAL TRADERS DOM MAKLERSKI S.A.
The Polish Compensation Scheme has a complex functional and institutional structure, where different participants have different roles. The on-going functions of maintaining the assets of the Compensation Scheme at the statutory level (management of assets pooled for the payment of potential compensations) are mainly performed by Krajowy Depozyt Papierów Wartościowych S.A. (KDPW).
Supervision of the Compensation Scheme and functions including the licensing and sanctioning of brokers participating in the scheme are exercised by the
Polish Financial Supervision Authority (KNF)
Resolution No. 867/16 of the KDPW Management Board of 20 December 2016 on determining the fee rate forming the basis for the calculation of mandatory annual contributions to the Investor Compensation Scheme in 2017
Eligible for protection
Eligible for protection in the Compensation Scheme are clients of licensed investment institutions who have signed a brokerage service provision agreement to the extent of activities covered by the Compensation Scheme. The Compensation Scheme protects investors who have invested their assets (cash and financial instruments) with participants of the Compensation Scheme.
Krajowy Depozyt Papierów Wartościowych
is authorised to operate the Compensation Scheme in order to pool resources for the payment of compensations.
Compensation Scheme participants are licensed operators of a brokerage business required by law to participate in the Compensation Scheme and to pay mandatory contributions to the Compensation Scheme: brokerage houses, banks which operate a brokerage business, and custodian banks. Investment fund companies which manage clients’ securities portfolios are also required to participate in the Compensation Scheme. Contributions of Compensation Scheme participants are pooled to create assets from which compensations are paid.
A receiver, administrator appointed by the court, or other person responsible for the management of an insolvent brokerage house is obliged to determine the balance due to investors at the date of an event which provides the grounds to pay the compensation and to draw up a list of eligible persons.
The Polish Financial Supervision Authority (KNF) exercises supervision over the Compensation Scheme and its participants.
The operation of the Polish Compensation Scheme began in January 2001. The Compensation Scheme was introduced to the Polish legal system in the implementation of Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes (Official Journal L 084, 26/03/1997 P. 0022–0031). It is a mechanism protecting the interests of investors by securing a certain (pre-set) part of clients’ investments with a licensed investment firm.
The principles of the Compensation Scheme were originally governed by the Act on Public Trading in Securities (Dz. U. from 1997, No. 118, item 754, as amended). As of 1 January 2006, the Compensation Scheme is governed by the Act on Trading in Financial Instruments (Dz. U. from 2005, No. 183, item 1538, as amended), hereinafter “Trading Act”, which superseded the Act on Public Trading in Securities.
The Directive requires the EU Member States to introduce in their territory one or more investor compensation schemes and disallows investment activities in the EU Member States of those investment firms which do not participate in an investor compensation scheme.
The Directive on investor-compensation schemes is based on the belief that the protection of investors and the maintenance of confidence in the financial system are an important aspect of the completion and proper functioning of the internal market.
The main principles adopted in the Directive on investor-compensation schemes are as follows:
- mandatory and universal scheme;
- minimum compensation level (EUR 20,000);
- prompt payment of compensation;
- territorial competence.