Recommended after years of communism, the Polish capital market focused on innovation from the very beginning. He was one of the first in the world where such extensive dematerialization of securities was introduced. Now it belongs to the avant -garde in the use of blockchain technology.
The beginning of the nineties in Poland is a time of unprecedented changes, economic transformation and return to the free market. One of the symbolic dates in this dynamic period became on April 16, 1991, when the Warsaw Stock Exchange was reactivated, opening a new chapter in the history of the Polish economy.
When the WSE began its operations, only five companies were recorded on it. The value of turnover during the first session reached just over PLN 2,000. The sessions were held once a week. Already then, however, the strength of our market was his ability to adapt new solutions.
What distinguished the Polish capital market from its older and more well -established competitors in the world was the fact that from the very beginning he focused on dematerialization of securities. The Polish stock exchange immediately entered the world of digital records without a single paper campaign in circulation.
Instead of duplicating diagrams based on physical documents, a system was introduced in which securities exist only in the form of an IT record. This strategic decision was a classic example of using the so -called “backward bonus”.
The lack of heritage of ossified, paper systems that have dominated for centuries on stock exchanges such as the one in Amsterdam, facilitated the building of infrastructure from scratch, immediately based on the most advanced technological solutions available in the world.
Immobilization versus dematerialization
In the context of the form of securities, two key concepts are distinguished: dematerialization and immobilization. Immobilization means the location of securities having a physical form in one place (usually in a central deposit) so that trading them can take place in electronic form, without the need to transfer the documents themselves.
Dematerialization, which was adopted in Poland, consisted in a complete departure from the physical form of securities, which exist only in the form of an IT record.
The key architect and guardian of this digital ecosystem from the first days of the Polish Stock Exchange was the national deposit of securities (KDPW), which was founded in 1991 as part of the WSE, in 1994 he separated from it, becoming an independent joint -stock company.
Today, KDPW together with the KDPW_CCP settlement chamber forms a thriving capital group responsible for registration and storage of securities, and transaction settlement. You can read more about her role and tasks in the text “What happens to shares when you click” Buy “? About the backstage and market foundations”.
The stock exchange is ready for crisis situations
Securities are not the paper in the literal sense. The advantages of their dematerialisation are resistance to physical threats – destruction, theft or loss. However, how to take care of the security of digital records and stability of market infrastructure?
The answer of KDPW is the support of its services on advanced IT systems such as KDPW_STREAM implemented in 2009, which processes an average of 100,000. operations per day, and its maximum capacity reaches 2 million transactions per day.
The efficiency and reliability of this solution confirm the years of undisturbed operation and many industry awards. It is worth emphasizing that over 90% of the KDPW group services are carried out using its own IT tools.
Safety is also strengthened by regular infrastructure tests. At least once a year, each accounting participant must take part in such a process (including brokerage houses).
During the tests of the system of maintenance (SZCF) KDPW_CCP and KDPW, they verify solutions and procedures adopted for the purposes of restoring readiness to work after extraordinary situations.
Emphasis on the technologies of the future
Like more than 30 years ago, KDPW remains at the forefront of the world's capital market infrastructure institutions. The best proof of this is the group's involvement in creating solutions based on blockchain.
The national deposit began to look at this technology as early as 2016, when it was associated primarily with Bitcoin, which arouses great distrust of financial institutions. However, KDPW noticed a chance in the solution underlying cryptocurrencies and 3 years later he offered the first service based on it.
In July 2019, in cooperation with IBM Polska, KDPW launched a blockchain platform for the capital market. The first service available on it was Evoting, allowing shareholders to take place remotely in general meetings. In addition, the blockchain of the general meetings of each company, whose shares are deposited in KDPW, is recorded.
KDPW, however, did not stop at the listed solutions. Currently, it is implementing the CSDondlt project, which involves the construction of an additional deposit and secondarylight layer based on distributed registers (DLT) technology.
– The effect of its operation is to be the service, for now only on the OTC market, conclusion and settlement of transactions in a nuclear manner in 24/7/365 mode, i.e. immediately, also during the inaccessibility of traditional market participants' systems – explained in an interview with Bankier.pl Rafał Wawrzyniak – CTO and managing director for IT in KDPW.
CSDondlt will allow investors to individual assets, such as shares or bonds, to blockchain and free use of them with the possibility of accounting for transactions at any time from anywhere in the world.
The project is already gaining recognition at the EU level and, according to its creators, can become a good mechanism not only for wider offering securities available on the Polish market, but also to build a connection between deposits throughout the European Union.
Article prepared in cooperation with KDPW
