National Depository for Securities (KDPW)

2

Overview of the Polish Capital Market

National Depository for

Securities (KDPW)

National Depository for

Securities (KDPW)

Polish Financial Supervision Authority (KNF) Polish Financial Supervision Authority (KNF)

MarketsMarkets

Financial institutions & Intermediaries

Financial institutions & Intermediaries IssuersIssuersInstitutional

investorsInstitutional

investors

Individual investors

Individual investors

National Bank of Poland

(Clearing Bank)

National Bank of Poland

(Clearing Bank)

3

KDPW – history & ownership

1991 – 1994: An integral part of the Warsaw Stock Exchange 1994 – Present : Independent joint - stock company 1997 – Clearing of derivatives 1998 – Multilateral cash netting for exchange and non-exchange

market 2002 – RTGS introduced 2003 – First foreign shares listed and settled 2009 – New Depository Clearing & Settlement System (NSDR)

Current shareholders (since 1999) The State Treasury - 1/3 The Warsaw Stock Exchange - 1/3 The National Bank of Poland - 1/3

4

Main KDPW Responsibilities

Custody of all securities admitted to trading following public issue

Reconciliation and monitoring

Clearing and settlement of transactions executed on regulated markets: the Warsaw Stock Exchange and BondSpot; and outside the regulated markets (New Connect, MTS-Poland)

Processing of corporate actions

Assigning ISIN codes for Polish issues (National Numbering Agency)

Risk management –management of:

Settlement Guarantee Fund covering regulated markets & ATS Collateral system for derivatives, Collateralisation of security loans in automatic securities lending -

borrowing system

5

Other KDPW Responsibilities

Additional Services: Management of the Investor Compensation Scheme

For the Polish Social Security System: Transfer payments between open-end pension funds Management of the Pension Guarantee Fund

Other: Membership of European and international associations and working

groups Education, promotion, sponsorship

6

Securities registered in KDPW

All securities admitted to trading in the regulated market must be registered in KDPW

Currently, the following securities are recorded in the KDPW system: Shares (foreign and domestic) Bonds (Treasury, Central Bank, Corporate, Municipal, Convertible,

EIB, with priorities rights, non-public bonds, mortgage bonds) Investment Fund Certificates Derivatives

Futures Contracts (WIG20 index, currency, share) Index Participation Units Options (European style), (WIG20 index, share)

Exception: Treasury bills - custody, clearing and settlement in the National Bank of Poland system

7

Basic principles of Clearing and Settlement

All securities settled in KDPW are dematerialised and transfers are made by book-entry between KDPW participant accounts Mandatory asset segregation (own assets, client assets)

Change of ownership at the moment of book-entry in securities account DvP Settlement model:

BIS model I, BIS model II Settlement :

T+2, T+3 - for regulated - market trades – SE, Bond Spot T+0 to T+n - for non-regulated market transactions – OTC

Two settlement channels: RTGS DVP 8.00-17.00, FOP 8.00-18.00 Multiple batch system 7.30-19.00

Cash leg settlement CBM - in the National Bank of Poland for PLN and Euro CLB for other currencies

Settlement liquidity facilities securities L&B automatic and on-request repo buy-in, sell-out

Number of investement accounts operated by KDPW Participants

8

KDPW in Figures - January 2010

Number of KDPW Participants, Including: 72

Resident participants71

• Brokerage houses23

• Bank15

• Other33

Non –resident participants

1

• Other 1

Issuers589

Foreign issuers36

Domestic issuers553

KDPW in Figures (2)January 2010

Capitalisation

Securities

842 599 505 490 PLN

Shares

399 664 970 568 PLN

- Domestic issuers

388 452 691 981 PLN

-Foreign issuers

112 122 785 87 PLN

Investement certificates

910 014 353 PLN

11

Daily settlement schedule : multibatch and RTGS

- 6 settlement sessions a day with intra-day finality after each session

Basic principles

BATCHES

7.30

10.30

13.00

15.30

18.30

19.00

RTGS

8.00

Technical

DVPFOP

FOP

FOP

Technical

17.00

18.30

DVPFOP

12

KDPW in the Polish capital market

Seller Buyer

Trade feed = Already matched for settlement

Cash accounts of the seller/ seller’s custodian cash

clearer in NBP

Cash accounts of the seller/ seller’s custodian cash

clearer in NBP

Cash accounts of the Buyer/ buyer’s custodian

cash clearer in NBP

Cash accounts of the Buyer/ buyer’s custodian

cash clearer in NBP

Trade Trade

Trade execution

MarketsMarkets

Trade execution

Post-trading processing flowPost-trading processing flow

Securities accounts of the Seller /

seller’s custodian

Securities accounts of the Seller /

seller’s custodian

Securities accounts of the Buyer /

buyer’s custodian

Securities accounts of the Buyer /

buyer’s custodian

Links with foreign CSDs

EVK

Euroclear Sweden

Links created with foreign CSDs (FOP links) in connection with the dual listing of shares on the WSE. More FOP and DVP links planned.

Basic principles of dual listing

• Foreign shares quoted on WSE in PLN• Clearing and settlement in KDPW in PLN• Dividends paid to Polish shareholders in foreign

currency• Transaction finality – entry on the participant’s

KDPW account• Shares need to be registered on KDPW account in

foreign CSD to be traded on the WSE• The transfer may be settled intra-day (RTGS in

KDPW)

Principles of KDPW cross-border linksFree of Payment transfers

The links work on a Free of Payment (FOP) basis,

which means that securities will be transferred without

a corresponding transfer of cash.

The links may in future be upgraded to a bilateral DVP

link, once a relevant business case has been identified

and the appropriate legal conditions have been met.

Links with foreign CSDs

No CSD Country Type of link Company* Year of opening

1. KELER Hungary Indirect MOL 2004

2. EVK Estonia Direct Olimpic Entertainment GroupSilvano Fashion Group

2007

3. OeKB Austria Direct WARIMPEXImmoeast

20032007

4. CDCP Slovakia Direct Asseco Slovakia 2007

5. Clearstream Frankfurt

Germany Indirect– CBL** bmp 2004

6 Monte Titoli Italy Indirect – CBL Unicredito Italiano 2007

7. DTC USA Indirect– CBL CEDC 2006

8. SCP Czech Republic

Indirect – CBL CEZ 2006

9. Euroclear France

France Indirect– CBL

Indirect – EB ***

ORCO

Belvedere

2007

2008

10. Euroclear UK & IR

UK Indirect – EB Atlas EstatesPlaza Centres

2008

11. Euroclear Sweden

Sweden Indirect - EB Reinhold 2007

* ** Clearstream Banking Luxembourg *** Euroclear Bank

Plans for the future

Romania (Indirect)

Canada (Indirect)

2010

KDPW Vision

Build a robust capital group by 2013:

• Anticipate competitive challenges;

• Build a service portfolio based on state-of-the-art, innovative

technologies and solutions creating value for capital market

participants;

• Support the development of a regional centre in Warsaw in

active co-operation with other Polish and foreign market

participants with KDPW as the main depository-settlement

institution in Central and Eastern Europe

19

KDPW Strategic Goals

(1) Introduction of a new KDPW business model

(2) Positioning KDPW as the leading CSD and clearing house in the CEE region

(3)KDPW integration with European infrastructures

(4) Introduction of new services to increase the value of the KDPW capital group

(5) Raising the standard and scope of services currently provided

(6) Optimisation of the KDPW capital group business processes

(7) Improving the input and skills of KDPW capital group personnel in order to meet the strategic goals

(8) Promoting the KDPW capital group corporate image and products and services through enhanced corporate communication

20

www.kdpw.pl