Digital technology in the capital market

KDPW Group services

The Polish market has a very well-developed post-trade infrastructure, which is responsible for all processes related to the clearing and settlement of transactions, as well as issuer services in the financial market. In addition, the KDPW Group offers market participants a range of additional services, which would not at all be possible without the application of modern digital technology.

The core services performed by KDPW and KDPW_CCP related to securities safekeeping and the clearing and settlement of transactions are processed by the kdpw_stream system. Like most IT solutions used within the KDPW Group, the system was built and is constantly being upgraded in-house, in close cooperation with market institutions.

The kdpw_stream system guarantees not only high levels of accessibility, efficiency, reliability and security, but also the ability to interact with other European systems and foreign financial institutions.

Most of the services provided by the KDPW Group are supported by its proprietary IT systems, including: transaction clearing, risk management, settlement, corporate actions services for issuers of securities, as well as the EMIR trade repository, ARM, SFTR service, LEI issuance, and investor compensation scheme.

Technology and issuer services

It would be impossible to cover the entire range of services offered by the KDPW Group in a single article, so we would like to concentrate on some key services introduced over the past few years that are considered significant for issuers and that leverage cutting-edge technology.

registration of bonds, mortgage bonds and investment certificates
Legal changes that came into effect in 2019, specifically established the role of the issuing agent, which significantly simplified and fast-tracked the registering process for these securities, while completely eliminating the need for paper certificates. Financial instruments introduced to the depository by the issuing agent are registered using a dedicated application available on the KDPW website. Based on the information entered via the application, KDPW also assigns ISIN, CFI and FISN codes to registered securities. In 2024, out of 2,225 bond issues registered in KDPW, 2,154 were issued through an issuing agent (these figures exclude Treasury bonds).

register of issuer obligations
At the same time that the obligation to register non-public debt securities came into effect, a public database of issued bonds (both public and non-public) and the status of corporate actions that issuers were obliged to perform was established in KDPW - the Register of Issuer Obligations (“RZE”). Although it may initially seem that providing such information imposes an additional regulatory reporting burden, the RZE effectively contributes to the development of the corporate bond market by enhancing the credibility and confidence of investors in these instruments.

shareholder disclosure
From September 2020, issuers have been able to use the "Shareholder Identification" application. It allows companies to disclose information about the identity of shareholders, including the number of shares they hold. The use of IT tools as part of this service improves data transfer based on standardised messages, which is particularly important when it is necessary to cooperate with other central securities depositories. It is worth noting that KDPW was one of the few central securities depositories in Europe to implement the relevant messaging solutions based on the ISO 20022 standard within the specified deadline. In addition to the tool that provides issuers with information about their shareholders, the General Meeting and eVoting applications were also upgraded. These services allow companies to provide their shareholders with a comprehensive notice of the General Meeting being convened or notify the address of the website where such information can be found.

trade repository
Some issuers are also participants in the EMIR and SFTR trade repository, i.e. services the KDPW Group provides related to the collection and storage of data on derivatives trades and securities financing transactions. The trade repository is primarily engaged in operating on gigantic data sets, which would be practically impossible without advanced technologies. In 2024 alone, the EMIR trade repository received over 1 billion reports, with 545 million of those being new contracts. Between 2014 and 2024, EMIR trade repository participants submitted a total of over 6.6 billion reports.

Blockchain in the capital market

As competition in the world of digital finance gathers pace, further digitisation and the adoption of new technologies in the capital market are becoming a necessity. The most intense competition is currently in the cryptocurrency market, which is closely associated with blockchain technology. A report on "How Poles invest in cryptocurrencies - 2025 edition" stated that 18.4 percent of Polish adults actively invest in this asset class. The National Investor Survey 2024, conducted by the Association of Individual Investors, reveals similar findings: 22 percent of respondents invest in cryptocurrencies, which is an increase of more than 2 percentage points compared with figures for 2023.

There are approximately 2.4 million open brokerage accounts in Poland, which represents about 8 percent of the adult population. Compared to the number of people investing in cryptocurrency assets, this figure is not particularly impressive, especially since only about 30 percent of brokerage accounts are active. Investing in cryptocurrencies is also predominantly the domain of younger people. The brokerage industry and other market players face a considerable challenge in how to encourage Poles, especially younger people, to invest in the stock market. However, blockchain technology is already being successfully used in the capital market, as demonstrated by the services offered by KDPW on the Blockchain Platform for the Capital Market - handling general meetings with the possibility of remote voting using the eVoting platform.

The eVoting application is the first service that KDPW has made available on the Platform. It provides support services for General Meetings of public companies, including electronic remote voting. The KDPW application has been seamlessly integrated with the eVoting application, providing issuers with a list of persons entitled to participate in the general meeting. Integrating these solutions simplifies the process for issuers to access KDPW services from a single contact point. Apart from issuers and shareholders, other users of the eVoting platform include entities managing securities accounts. The launch of eVoting on the Blockchain Platform provides these entities with the opportunity to integrate with the securities account management service.

The Polish market regulator, the Polish Financial Supervision Authority, has also observed the trend in blockchain technology. An example of this is the DLT Virtual Sandbox, which was developed through a partnership between the Polish Financial Supervision Authority and KDPW. This sandbox provides a secure environment for testing financial solutions and services using DLT technology.

CSDonDLT

Although most of the initiatives exploring blockchain technology in the capital market have been pilot projects, the world’s largest capital market infrastructure institutions, including the KDPW Group, are actively investing in their development.

In KDPW, DLT technology is not perceived as a threat to traditional market institutions, but rather as an opportunity to transform and adapt them to the demands of the modern digital economy. The latest project in this area, launched under the name CSDonDLT, involves the implementation of an additional, complementary layer of the depository-settlement system using blockchain technology. Currently, the project focuses on the settlement of OTC transactions, including both custody, free transfer of securities and atomic settlement of transactions within the DLT layer. The pairing and consequently full interoperability of both layers of the depository and settlement system will facilitate seamless transfers of securities between the traditional and DLT layers - and vice versa.

The transition from intricate central systems to DLT infrastructure will be a complex process. Market participants are likely to need to operate in parallel – in traditional systems, while testing DLT-based solutions to avoid disrupting day-to-day processes and ensure that markets continue to operate securely. This is the approach envisioned in the CSDonDLT project.

The CSDonDLT project aims to improve functional and cost efficiency, increase transparency and minimise operational and systemic risks, while ensuring compliance with applicable laws and capital market standards. The KDPW Group is constantly enhancing its capabilities and leveraging new technologies to expand the scope of its services. This approach enables it to adapt to the evolving demands and expectations of its clients and increase customer satisfaction with the solutions it provides.