Settlement process - Poland

Settlement cycles

Settlement flow

Settlement for Stock Exchange (SE) trading as per Art121 of the Securities Law

Transactions executed on the Warsaw Stock Exchange (WSE), including transactions settled under Article 121 of the Securities Law, are settled in KDPW based on settlement instructions submitted by KDPW participants (custodian banks and brokers), in accordance with KDPW rules.

Settlement matching and settlement processing for both free‑of‑payment (FOP) and against‑payment (AP) transactions are performed by KDPW during the settlement sessions on the intended settlement date.

Settlement flow for transactions executed under Article 121

For transactions executed on the Warsaw Stock Exchange under Article 121 of the Securities Law, settlement between the local broker, international broker and custodians is based on settlement instructions rather than solely on contract notes.

Based on an extract from the local broker’s contract note, the local custodian registers the transaction on the international broker’s clearing account. Upon receipt of the international broker’s settlement instruction, the local custodian validates the instruction and instructs KDPW to settle the transaction between the local broker’s and international broker’s accounts on the settlement date.

If the international broker does not recognise the trade and does not submit a settlement instruction, the local custodian may cancel the trade registration and settlement. Settlement between the international broker and the global custodian, including in cases where both maintain accounts with the same local custodian, must be executed via KDPW.

Stock Exchange transactions are settled in KDPW based on settlement instructions submitted by KDPW participants and matched in accordance with KDPW rules (or in the National Bank of Poland for Treasury Bills)

Registration

There is no registration at KDPW level.

There are two different account structures possible at the level of the Polish custodian: omnibus accounts and segregated accounts.

Under an omnibus account structure, where securities are held for multiple underlying holders, the account holder may be required to disclose beneficial ownership information for specific events such as tax processing (e.g. relief at source), proxy voting, and certain voluntary corporate actions, in line with Polish market and KDPW requirement.

Please refer to the Disclosure Requirements - Poland for details of disclosure requirements for the omnibus account structure.

Note: All domestic Polish securities held by Clearstream Banking with Bank Handlowy are held under the omnibus account structure.

Stamp duty

Stamp duty is not applicable in the Polish market for the regulated market, nor for any T-bond or T-bill transactions.

OTC transactions in instruments other than T-bonds and T-bills and not concluded with a local brokerage house or a local bank running brokerage activities as counterparty (or with the intermediation of such local brokerage house or local bank) may be subject to 1% stamp duty tax.

Additionally the following transaction are exempt from stamp duty:

• a foreign investment firm’s OTC sale of securities which were acquired (as proprietary trading) in an organized market trading, for example on the WSE (i.e. as part of its remote membership business)
• sale of securities to a foreign investment firm
• sale of securities with the intermediation of a foreign investment firm (the term “intermediation” is not clear although it may be expected that this shall cover the sales transaction between two clients of a foreign investment firm, where such foreign investment firm intermediates and arranges such a transaction, but is not counterparty to such transaction).

Securities lending transactions are also exempt from stamp duty.

The 1% stamp duty will be calculated on transactional value. If the trade is settled "free of payment", the market value is applied.

The buyer is responsible for the calculation and payment of stamp duty as well as the completion of the relevant tax forms and submission to the appropriate tax office. The official form is available only in Polish language.

The tax form should be submitted and all stamp duty payment obligations exercised within 14 calendar days from the settlement date of the OTC transaction. As per market practice, tax forms in Poland are sent via registered mail.

Customers are required to check with their tax advisor applicability of stamp duty related to their trades.

Market penalties

Penalties introduced by CSDR regulations apply to late‑matched trades and failed settlement instructions.

Subject to the applicable provisions of Regulation (EU) No 909/2014 (CSDR) and, in particular, Article 7, the local CSDs (KDPW/SKARBNET4) and KDPW_CCP have introduced Settlement Fail Penalties (SEFP) and Late Matching Fail Penalties (LMFP).

Cash penalties are applied to all settlement instructions, including instructions that have been put in an “on hold” status, provided that they have been matched prior to, on, or after their Intended Settlement Date (ISD) and have failed to settle on their ISD.

The following instructions are excluded:

• Instructions that do not constitute “transfer orders” within the meaning of Directive 98/26/EC;
• Corporate action instructions (e.g. coupon payments and redemption of securities at maturity);
• Technical instructions (e.g. T2S automatic realignments), and;
• Transactions that transfer securities from the available balance of a securities account to its sub‑balance (settlement restrictions).

KDPW_CCP

Subject to the applicable provisions of Regulation (EU) No 909/2014, and in particular Article 7, settlement instructions cleared by KDPW_CCP that have not settled on their settlement date are subject to a Settlement Fail Penalty.

KDPW

Subject to the applicable provisions of Regulation (EU) No 909/2014, and in particular Article 7, KDPW applies Settlement Fail Penalties (SEFP) and Late Matching Fail Penalties (LMFP) to versus payment (VP) and free of payment (FOP) over‑the‑counter (OTC) transactions with the following codes: BSBK, OWNE, OWNI, REPU, RVPO, SBBK, SECB, SECL and TRAD.

Cash penalties are collected by KDPW on the eighteenth Penalties Business Day (PBD) of each month through the cash settlement accounts of the clearing member.

Buy-ins

Buy-ins apply in the market for WSE transactions. The KDPW may arrange a buy-in transaction for a WSE broker or remote member on the third day after the expected settlement date.

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