Direct Participation in KDPW

An entity seeking to manage securities accounts and applying for direct participation in KDPW, at the same time as for the status of clearing member, sends KDPW an application form (template 1), available on the KDPW website, which will need to contain the following information:

• A description of the type of participation being applied for - in this case direct participation,
• Information on whether the applicant intends to obtain the status of clearing member and in which scope (e.g. for the WSE spot market, or derivatives market),
• The types of activities, or type or types of participation status applicable for those activities which the applicant wishes to obtain, according to the classification described in the KDPW Rules in § 11, subpara. 1-4. Note: if the applicant is seeking any of the following participation types: representative, market maker representative, Brokerage Office - Client Market Maker, the applicant will need to indicate the participant, or the entity that is not a participant, for which the applicant intends to perform the role of clearing member, as well as the scope of those responsibilities,
• A declaration that the applicant is familiar with the principles available on the KDPW website relating to sending and receiving instructions and information in electronic form, used in relations between KDPW and direct participants, and is familiar with the responsibilities that need to be met as a direct participant according to the provisions of § 24, subpara. 3 of the KDPW Rules,
• A declaration that the financial conditions described in § 24, subpara. 2 of the KDPW Rules, have been met by the applicant, where the status of clearing member is also being applied for.

The following documents need to be provided together with the application, according to the requirements of § 20 of the KDPW Rules:

1. A copy of the company statute, or articles of association and a valid copy or excerpts from the relevant company register;
2. A copy of the brokerage licence or licences to conduct other activities related to securities trading or registration, if such licences are required by separate legal regulations. For foreign investment companies providing a licence issued by the regulatory authorities supervising their activities, there needs to be provided an additional declaration showing that conditions have arisen to allow them to begin performing brokerage activities in the territory of the Republic of Poland, defined in Article 117(3), second sentence, of the Law on Trading in Financial Instruments, or a document from the Polish Financial Supervision Authority (KNF), or a department of the Polish Financial Supervision Authority, confirming the receipt from the relevant foreign regulatory authorities of notification on the intention to begin performing brokerage activities in the Republic of Poland by that foreign investment company, indicating the date when this notification was received,
3. Cards with specimen signatures of the applicant's authorised representatives, as well as copies of power of attorney documents in instances where the right to represent the applicant by those persons submitting a specimen signature on the specimen signature card does not derive from the corporate documents provided (template no. 20),
4. Cards with specimen signatures of persons authorised to make and receive declarations from the National Depository on behalf of the applicant, these declarations not being declarations of will (template no. 19),
5. An information card containing addresses for deliveries as well as a list of staff employed in posts involving securities trading-related activities, that includes their positions, telephone/facsimile numbers as well as email addresses,
6. A declaration giving consent to arbitration by the arbitration court at the National Depository (template no. 7)
7. A declaration indicting the number or numbers of bank accounts managed in the settlement bank (templates nos. 12 - 13, 16 - 16a) ,
8. A document containing a description of the principles and methods of managing a securities registry by the applicant, including rules for making entries on securities accounts or derivatives accounts - detailed requirements relating to the contents of the documents prepared by the applicant managing securities accounts are described in § 23 of the KDPW Detailed Rules of Operation,
9. A document containing the principles the applicant has adopted for maintaining business continuity and safety of operations related to securities registration - detailed requirements relating to the contents of the documents prepared by the applicant managing securities accounts are described in § 43 of the KDPW Detailed Rules of Operation,
10. Written information indicating the types of reports, or other financial information, described in § 30, subpara. 3, points 2 and 3 of the KDPW Rules, as well as the deadlines before which the applicant is obliged to provide them - only in instances where the applicant is a foreign investment firm, or foreign financial institution.

Applications for a participation agreement that involve the following types of participant status: Organised Trading Market Maker, Depositor-Market Maker, Brokerage Office-Client Market Maker, or Market Maker Representative will only be considered if KDPW receives information from an organised market operator that confirms the authorisation for the applicant or the entity which the applicant intends to represent in clearing and settlement activities to perform activities on a given market.

According to the provisions of § 14 of the KDPW Rules, clearing member status may be obtained depending on the type of participation or types of transactions the participant will be seeking clearing member status for, on condition that the participant makes a contribution to the appropriate part of the Settlement Guarantee Fund, described in § 62 of the KDPW Rules, or the appropriate ATS guarantee fund, described in § 66 subpara. 2 of the KDPW Rules, (and on condition that the participant performs other obligations resulting from participation in the creation of the settlement guarantee system) and that the participant provides the power of attorney documents described in § 4 subpara. 1, points 4-7 of the KDPW Detailed Rules of Operation - templates nos. 8-11 and declarations on becoming a member of the appropriate ATS guarantee fund.

According to the provisions of § 18 of the KDPW Rules, the participation agreement is concluded two weeks following the submission of the application to KDPW, together with all the required supporting documentation and annexes, if the entity submitting the application fulfils the participation requirements specified by the law and by the KDPW Rules, and the application and supporting documentation meet the formal requirements specified in the KDPW Rules.

Please also note the following:

• The application and supporting documentation and annexes need to be provided in their original form, or in officially authorised copies - according to the provisions of § 4 subpara. 3 of the KDPW Rules, and additionally, documents described in points 1 and 2, which have been prepared abroad, require the appropriate legal authentication, as described in § 3 of the KDPW Detailed Rules of Operation,
• According to § 2, subpara. 2 of the KDPW Detailed Rules of Operation, supporting documentation appended to the application, described in points 1 and 2, as well as the powers of attorney submitted by participants, or by an entity applying to conclude a participation agreement with KDPW, which are in a foreign language should be submitted in Polish translation, prepared and authorised by a certified translator. The remaining documents and the applications itself need to be submitted in Polish,
• A direct participant managing securities accounts shall be obliged to recruit staff with the qualification of securities registration specialists to perform securities book-keeping - this is a requirement of § 33 of the KDPW Rules; requirements relating to the number of specialists that need to be recruited are described in Resolution No. 783/98 of the KDPW Management Board of 21 December, 1998 (with later amendments introduced by Resolution 37/02 of 28 January, 2002).

An entity which has obtained the status of direct participant is obliged to conclude an agreement with KDPW, described in § 4, subpara. 1 of the KDPW Rules, describing the rules for exchanging instructions and information made available and delivered to or from KDPW in electronic form.

In order to manage registration accounts, an NKK attribute first needs to be assigned which takes place on the basis of the appropriate instruction sent by the participant to KDPW and the opening of an entity account, which also takes place on the basis of instructions sent to KDPW (§ 26 subpara. 1 of the KDPW Detailed Rules of Operation).

A participant managing securities accounts is obliged to provide the following information to KDPW on a periodic basis:

• Daily reports in the form of messages - semt.rc1.001.01, described in § 22 subparas. 5 and 6 of the KDPW Detailed Rules of Operation,
• Information indicating sale transactions (template No. 58), executed by participants without a client order, or incompatible with a correct client order, which following settlement lead to temporary inconsistencies between the balances on the registration accounts managed for participant by KDPW and the balances on the corresponding securities accounts - to be sent not later than 5 days following the end of the month for which the information has been prepared,
• Information relating to the ownership status and turnover of Treasury bonds in the form of message - semt.tr1.001.01, on a monthly basis according to the Ordinance of the Minister of Finance of 14 April 2006 on reporting requirements relating to trading in securities issued by the State Treasury, as amended by the Ordinance of the Minister of Finance of 22 May, 2009,
• Information on the number of securities accounts being managed, sent on a monthly basis not later than 5 days into the month following the month for which the report has been prepared - according to Resolution No. 202/98 of the KDPW Management Board of 13 March, 1998 (template 85),
• Financial information described in § 30 subpara. 1 or 2 of the KDPW Rules, whereas for foreign investment firms and other foreign financial institutions, the information indicated in subpara. 3, in the manner described in subparas. 4 and 5 of the aforementioned Rules.