Changes to IRGiT regulations – implementation of an auction mechanism for handling insolvencies and conduct of activity by utilities on the account of group companies

 

  • IRGiT SA introduces changes to the Regulations of the Exchange Clearing House (Commodity Market) and the Detailed Clearing and Settlement Rules for markets operated by the Polish Power Exchange. The changes will enter into effect as of 10 May 2019.
  • IRGiT, in cooperation with the Polish Power Exchange (“PPE”), expands the mechanism for automatic closing of positions in forward contracts (auction mechanism for the needs of handling insolvencies) for the entire Forward Commodity Market cleared by IRGiT.
  • IRGiT regulations were also formulated more precisely with regard to the possibility of using the receivables of an insolvent Member of the House to cover their liabilities.
  •  In connection with Article 9 Section 6a of the Commodity Exchange Act, IRGiT introduces changes taking into account the possibility of conduct of activity by utilities also on the account of companies from the same capital group.

The auction mechanism for the needs of handling insolvencies has been developed in cooperation with the PPE and assumes the use of the functionalities of the exchange transaction system on the rules laid down in the Trading Rules of the PPE Exchange Commodity Market. The implementation of this mechanism will allow for optimizing the process of closing the positions of the Members in the event of their insolvency. The auctions will also make it possible to minimize the negative impact of the position closing process on the market price level. Additionally, to facilitate the actions undertaken in the case of insolvency of the Member of the House, the IRGiT regulations now provide for the possibility of covering unsettled liabilities of the Member of the House through transferring their receivables to the assigned account in the Clearing Bank.

The change and adaptation of the IRGiT regulations regarding risk management is an element of the program aimed at optimization of the clearing guarantee system operated in the company.  The draft changes to the regulations obtained a positive opinion of the Risk Committee operating at IRGiT.

The implementation of the changes to IRGiT regulations making it possible for utilities to conduct activity also on the account of companies from the same capital group will allow for expanding the methods for transaction clearing by utility groups. In particular, as part of the introduced model, it will be possible to compensate the payments on account of settlements and compensate the Delivery Margin and Historic Margin between the accounts of group entities being the utility’s clients.

Detailed operational message