Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 5

The major risks in Securities Systems should be mitigated by five key measures:

• the implementation of real delivery versus payment
• the adoption of a trade date plus one settlement cycle in a form that does not increase operational risk.
• the minimisation of funding and liquidity constraints by enabling stock lending and borrowing, broad based cross collateralisation, the use of repos and netting as appropriate
• the enforcement of scrip-less settlement
• the establishment of mandatory trade matching and settlement performance measures.

1.	Does the market use DvP settlement procedures in accordance with one of the recognised BIS models? If so, which one? If the model is not BIS model 1, are there plans to move to this model?	The settlement of securities transactions takes place according to the principle of DvP Bank of International Settlement (BIS) Model 2, which means that securities are transferred in gross, while cash payment is subject to multilateral netting and the net payment due is transferred across the payers' accounts. Settlement Model 2 applies for all settled transactions with the exception of certain operations such as the settlement of Treasury bond auctions, which are settled according to Model 1 (gross in securities and cash). It is planned to introduce Model 1 for the settlement of Treasury bond transactions in the near future.
2.	Does the market have a rolling settlement cycle of T+3 or shorter for all exchange traded instruments?	Transactions from the regulated market are settled in T+3, with the exception of certain types of securities, such as bonds or warrants, which are settled in T+2, and with exception of certain types of transactions, such as package transactions, which are settled on T+X (depending on an agreement between the parties to the transaction).
3.	Could the market reduce the current settlement period to T+2 or below, without increasing fails rates? If so, how would this be achieved, and what plans are there to shorten the existing settlement cycle?	The National Depository will soon examine whether its participants are ready to introduce a T+2 settlement cycle for all transactions as a standard settlement cycle, irrespective of the type of securities involved. For the non-regulated market, it is possible to settle transactions with a shorter settlement cycle.
4.	Is matching of trade details achieved on trade date, at least for direct market participants; and by trade date plus one for indirect participants?	The mechanism used to confirm the details of transactions concluded by direct participants in the regulated markets carried out on the day the transaction is concluded according to the procedures governing these markets (the Warsaw Stock Exchange and the Central Table of Offers (CTO) - operator of the over-the-counter regulated securities market). Settlement instructions need to be confirmed within the KDPW system by both parties to a transaction concluded outside the regulated market between direct participants of the KDPW. Transaction settlement conditions concluded on behalf of indirect market participants or their clients should be confirmed on transaction day if the indicated settlement date is T+1, or on T+1 if the settlement date is later.
5.	Is the depository scrip-less, and, if not, is it working to enable scrip-less settlement?	Securities are not admitted to public trading in paper form.
6.	Does the market allow partial settlements?	Partial settlement is not permitted.
7.	Can the depository accommodate same day turnarounds?	Yes. The National Depository operates in 5 batches throughout the day.

Bank of International Settlements (BIS) Settlement Models

Model 1:	Systems that settle transfer instructions for both securities and funds on a trade-by-trade (gross) basis, with final (unconditional) transfer of securities from the seller to the buyer (delivery) occurring at the same time as final transfer of funds from the buyer to the seller (payment).
Model 2:	Systems that settle securities transfer instructions on a gross basis, with final transfer of securities from the seller to the buyer (delivery) occurring throughout the processing cycle, but settle funds transfer on a net basis, with final transfer of funds from the buyer to the seller (payment) occurring at the end of the processing cycle.
Model 3:	Systems that settle transfer instructions for both securities and funds on a net basis, with final transfers of both securities and funds occurring at the end of the processing cycle.