Company Presentation

September 2014

KDPW_CCP

Overview of the Polish Capital Market

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KDPW

Financial Supervision Authority (KNF)

WSE Main Market, BondSpot, Catalyst,

NewConnect, OTC

Financial institutions and intermediaries IssuersInstitutional

investors

Individual investors

National Bank of Poland

KDPW_CCP

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join the celebrations of the 25th anniversary of economic freedom in Poland

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was established in 1991

was separated in 1994, as an independent, join stock company

was created in 2011

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KDPW_CCP

100 %

NBP

Treasury

WSE

33%

33%

33% KDPW:

Trade repository service – EMIR compliant. One of the first 4 trade repositories in UE. ESMA registration of KDPW_TR (7 Nov. 2013)

LEI – one of the 14 agencies in the world allocating LEIs

Regulated Market ATS Derivative OTC

Clearing

Risk Management

Collateral Management

SPAN VaR

Govt. Bonds T-BillsPLN WIG20 Companies

REPO OTC

Regulated Market ATS Cash OTC

Central Securities Depository

Corporate Actions

Numbering Agency (ISIN, LEI)

Operational Links with Foreign CSDs

Managing Deposit Accounts Registering and Safekeeping of Securities

OFE Transfer Payments

Trade Repository

Exchange Clearing House (GIR KDPW)

Database Management

Settlement

Investor Compensation Scheme

Asset Management

Guarantee Fund

100%

Main responsibilities of KDPW and KDPW_CCP

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KDPW_CCP Milestones

2009

• New Development Strategy of KDPW

2010

• Creation of KDPW_CLEARPOOL Clearing Guarantor – first step to CCP

2011

•Establishing of KDPW_CCP clearing house:• Separate legal entity• New clearing guarantee system• SPAN • CCP’s own capital

2012

• Introducing novation to the Polish legal system• Introduction of OTC clearing service

2013

• Application for authorisation

2014

• EU Authorisation of KDPW_CCP

July 2011

Nov. 2012

8.04.2014

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Authorised CCPs in UE (as of 12.09.2014)

No. CCP Country Date

1 Nasdaq OMX Clearing AB Sweden 18.03.2014

2 European Central Counterparty N.V. Netherlands 1.04.2014

3 KDPW_CCP Poland 8.04.2014

4 Eurex Clearing AG Germany 10.04.2014

5 Cassa di Compensazione e Garanzia S.p.A. Italy 20.05.2014

6 LCH.Clearnet SA France 22.05.2014

7 European Commodity Clearing Germany 11.06.2014

8 LCH.Clearnet Ltd United Kingdom 12.06.2014

9 Keler CCP Hungary 4.07.2014

10 CME Clearing Europe Ltd United Kingdom 4.08.2014

11CCP Austria, Abwicklungsstelle für Börsengeschäfte GmbH

Austria 14.08.2014

12 LME Clear Ltd United Kingdom 3.09.2014

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KDPW_CCP - Markets & Products

CASH MARKET DERIVATIVES MARKET

Regulated ATS OTCRegulated

- Warsaw Stock Exchange (WSE)

- BondSpot

shares, bonds, subscription rights, allotment certificates, investment & structured certificates, index participation units, mortgage bonds, warrants, ETFs

- NewConnect- Catalyst- BondSpot

shares, allotment certificates, bonds, mortgage bonds

- Warsaw Stock Exchange (WSE)

futures contracts, options, index participation units

Forward Rate Agreements, Interest Rate Swaps, Overnight Index Swaps, Basis Swaps

- OTC (MarkitWire, SWIFTAccord)

OTC

- Matching Engine for REPO

T-bonds

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About KDPW_CCP

KDPW_CCP operates as a CCP (central counterparty) within the meaning of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, performing the clearing of transactions executed in the cash and derivatives markets, both in on-exchange and off-exchange (OTC) markets.

In accordance with KDPW_CCP regulations (the Rules of Transaction Clearing (Organised Trading) and the Rules of Transaction Clearing (Non-Organised Trading)) KDPW_CCP becomes the counterparty for all transactions accepted for clearing.

This is performed using the mechanism of clearing novation, introduced on the basis of the Law on Trading in Financial Instruments.

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KDPW_CCP guarantees clearing of transactions executed on the regulated cash and derivatives market.

Regulated cash market trading platforms Regulated derivatives market trading platform

Regulated Market and Alternative Trading System

KDPW_CCP guarantees clearing of transactions executed on the cash market in the alternative trading system.

ATS cash market trading platforms:

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Since the end of 2012 KDPW_CCP has operated an OTC derivatives trade clearing system including a clearing

liquidity guarantee system.

Main functionalities of the OTC trade clearing system:

clearing of trades accepted to the OTC clearing system and intermediation in settlement arising from clearing

risk management

collateral management

function of central counterparty (CCP) through novation

reporting to the Trade Repository (service offered by KDPW)

OTC Clearing in KDPW_CCP

Bank A

Bank B

Trade Repository (KDPW)

National Bank of PolandConfirmation

platforms* Communication

SWIFT

CSD (KDPW)• repo settlement • safekeeping

SWI

EMIR compliant

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FRA IRS OIS Basis Swaps REPO

In the future: instruments denominated in EUR

and other currencies – with regard to market demand.

PLN

OTC Clearing: Cleared Instruments

KDPW_CCP has focused on OTC derivatives denominated in PLN

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MarkitWire

OTC Clearing: Confirmation Platforms

KDPW_CCP clears trades on the basis of clearing instructions delivered by an electronic platform operator (MarkitWire, SWIFT Accord or proprietary matching solution for REPO).

SWIFT Accord

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Reporting to Trade Repository

In addition to compliance with its reporting obligations as a CCP, KDPW_CCP has developed the service of reporting derivative contracts to the Trade Repository operated by KDPW (KDPW_TR) on request of Clearing Members.

Reporting can be delegated both by Clearing Members and through them by their Clients and entities concluding derivative transactions on request of their Clients (Brokers).

On 7 November 2013 The European Securities Market Authority (ESMA) has registered the KDPW Trade Repository, confirming that it fulfills all trade repository requirements under EMIR.

The KDPW Trade Repository (KDPW_TR) was one of the first four such institutions to be registered in Europe.

KDPW_TR is approved to register all derivative contracts classes, both from the regulated and OTC market.

EMIR compliant

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_CCP:Clearing Guarantee System – Default Waterfall

Credits of the defaulting member

Margins:

initial deposit > initial margin > additional margin

Resources of the relevant default fund Contributed by the defaulting member

Dedicated resources of KDPW_CCP(in the amount corresponding to at least 25% of the capital requirements taking into account

the allocation of the resources in relation to the size of the fund)

Contributions of other KDPW_CCP clearing members to the relevant default fund

Own funds of KDPW_CCP(up to 110% of the capital requirements)

Additional contributions of other KDPW_CCP clearing members to the relevant default fund

(not more than 50% of the last existing contributions according to the lates update)

Remaining own funds of KDPW_CCP

EMIR compliant

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General clearing member: the amount of PLN 50 M (ca. EUR 12 M) and the sum of

PLN 5 M (ca. EUR 1.2 M) for each entity represented by the clearing member in any scope for the clearing of transactions performed by KDPW_CCP – for banks;

the amount of PLN 15 M (ca. EUR 3.5 M) and the sum of PLN 2 M (ca. EUR 0.5 M) for each entity represented by the clearing member in any scope for the clearing of transactions performed by KDPW_CCP – for brokerage houses;

Ordinary (direct) clearing member: PLN 25 M (ca. EUR 6 M) for banks; PLN 4 M (ca. EUR 1 M) for brokerage houses;

Clearing house: PLN 15 M (ca. EUR 3.5 M).

Capital Requirements for Clearing Members

Organised Trading:

General clearing member: PLN 100 M (ca. EUR 25 M);

Individual clearing member: PLN 50 M (ca. EUR 12.5 M);

Clearing house: PLN 100 M (ca. EUR 25 M).

OTC Market:

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www.kdpwccp.eu