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DIRECT PARTICIPATION IN THE SYSTEM OF THE NATIONAL DEPOSITORY FOR SECURITIES - Spot Market

An institution intending to keep securities accounts, when applying for direct participation in the National Depository for Securities (KDPW) and the status of a clearing member, submits to KDPW an application for participation agreement specifying:

• the relevant participation type (direct),
• whether, and if so to what extent, the applicant intends to apply for the status of a clearing member (e.g. spot market of the Warsaw Stock Exchange, derivatives market),
• the relevant activity type, by indicating one of the types of participant status set forth in §11(1) of the Rules of the National Depository ("the Rules"). Where the participant status type referred to in §11(1)(11) or §11(1)(12) has been selected, a participant or a non-participating institution for whom the applicant intends to act as clearing member, as well as the scope of related activities to be performed by the applicant, also need to be specified,
• a declaration that the applicant fulfils the organisational, material & technical and financial requirements referred to in §24 of the Rules.

According to §20 of the Rules, the following documents should be attached to the application:

1. A copy of the company's statute or articles of association and a valid copy or excerpts from the relevant company register,
2. A copy of their brokerage licence or licence to conduct other activities related to securities trading, if such licences are required by separate legal regulations.
   In the case of a foreign investment company providing a licence issued by the authorised body supervising its activities, an additional declaration showing that the requirements applicable to commencing brokerage activities in the Republic of Poland, defined in Article 117(3), second sentence, of the Act on trading in financial instruments ("the Act") have been met, or a document issued by the Polish Financial Supervision Authority (KNF) or the Office of KNF, confirming that KNF has received from the appropriate foreign supervisory body a notification of the intention to begin performing brokerage activities in the Republic of Poland by the foreign investment company, indicating the date when this notification was received,
3. A card with specimen signatures of the applicant's authorised representatives, as well as copies of power-of-attorney documents in instances where the right to represent the applicant by those persons submitting a signature on the specimen signature card does not derive from the statute or articles of association;
4. A card with specimen signatures of persons authorised to make to and receive from the National Depository, on behalf of the applicant, statements other than declarations of intent;
5. A card with specimen stamps used by the applicant (a card comprising corporate stamps to be used in contacts with KDPW),
6. An information card containing a list of staff responsible for securities trading-related activities, that includes their positions, addresses for professional purposes and telephone/facsimile numbers,
7. A declaration giving consent to arbitration by the arbitration court at the National Depository,
8. The rules for opening and keeping securities accounts and cash deposit accounts,
9. The rules governing the registration of securities operations and the settlement of transactions concluded on clients' accounts, together with specimen registration documents (such rules specifying the general procedures and methods of registration, e.g. information that the register is a computerised register and a statement that the registration system is compliant with the relevant KDPW regulations, and where such regulations are departed from, e.g. if operations are registered in a manner other than that specified in the Registration Procedures, such departures should be described and acceptance thereof should be requested. Additional submissions include a sample securities daily balance form, register of operations and internal accounting note),
10. The rules for maintaining the continuity and the security of operations related to securities registration. The content of those rules is governed by §32 of the Detailed Rules of Operation of the National Depository for Securities ("the Detailed Rules") and its drafting procedures - by §29-§32 of the Detailed Rules.
11. The company's account structure (charter of accounts), as defined by the appropriate accounting regulations,
12. A list of accounts used for the registration of securities, drawn up on the basis of Appendix 1 to the Detailed Rules, as well as the List of Participants' Accounts referred to in Chapter I of the Registration Procedures;
13. A written notice specifying the types of reports and other financial statements referred to in §30(3)(3) and §30(3)(4) of the Rules and deadlines by which such reports must be submitted - obligatory only in the case of foreign investment firms performing brokerage activities in the territory of the Republic of Poland on the basis of Article 117(1) of the Act or in the case of other foreign legal persons performing brokerage activities in the territory of the Republic of Poland.

Applications for a participation agreement that involve the following types of participant status: Stock Exchange Market Maker or Over-the-Counter Market Maker, shall only be accepted if the National Depository receives information from the operator of the regulated market that confirms the authorisation for the applicant to commence activities on that market.

According to §14 of the Rules, clearing member status may be obtained on condition that the applicant makes a payment to the appropriate part of the Settlement Guarantee Fund referred to in §62 of the Rules (such payment being made according to the terms specified in the Rules of the Settlement Guarantee Fund), and on condition that the participant performs the following other obligations resulting from its participation in the settlement guarantee system:

• power-of-attorney documents referred to in §6 of the Detailed Rules (samples nos. 8-10) are delivered;
• details of bank account in the settlement bank (samples nos. 12 and 13) are provided.

According to §18 of the Rules, the participation agreement is deemed to have been concluded two weeks after the relevant application, together with all obligatory enclosures, is submitted to the National Depository, provided that the applicant fulfils the requirements for participation specified by the law and by the Rules, and the application and its supporting documentation meet the formal requirements specified in the Rules.

Please note:

• applications and supporting documentation submitted to the National Depository should be provided in the original or a certified copy, as provided for under §4 of the Rules;
• pursuant to §2(2) of the Detailed Rules, an application's supporting documentation specified in points 1 and 2, as well as powers of attorney submitted by participants or institutions applying for participation drafted in a foreign language should be delivered translated into the Polish language and certified by a sworn translator. §3 of the Detailed Rules describes the relevant legalisation procedures applicable to any documents issued outside Poland;
• for the purposes of securities registration, participants keeping securities accounts are obliged to employ persons who have obtained the qualification title of securities registration specialist, in accordance with §33 of the Rules. Detailed information specifying the number of specialists to be employed by participants is included in Resolution no. 783/98 of the Management Board of the National Depository for Securities dated 21 December 1998, as amended (Resolution no. 37/02 dated 28 January 2002).

Having entered into the participation agreement, the participant requests the National Depository to provide:

• the installation kit of the ESDI e-mail software used for the exchange of information and documents between the participants and KDPW; the software is provided upon entering into a separate agreement with KDPW;
• the software used for the submission of settlement documents (settlement instructions and transfers) to the KDPW's system - Module A and Module K.

Participants keeping securities accounts are obliged to submit to KDPW, on a regular basis:

• daily reports (RDE and RKZ documents) referred to in §17(4) of the Detailed Rules in the form and manner specified in Resolution 186/02 of the Management Board of the National Depository for Securities dated 17 May 2002 - on a weekly basis,
• information indicating those transactions executed by the participant without a client order, or those whose details do not correspond to a correct client order, information on such an order not being executed within the deadline set, as well as information indicating transactions executed as a result of other errors - on a monthly basis, within 5 days from the end of the month to which they relate (sample 58),
• information on the balances of, and volume of trade in, T-bonds - on a monthly basis, in accordance with the provisions of the Regulation of the Minister of Finance dated 14 April 2006 specifying reporting obligations in respect of trading in securities issued by the State Treasury (SMF, RMF and PMF documents),
• information on the number of securities accounts - on a monthly basis, by the fifth day of the month following the month to which such information relates, in accordance with Resolution 202/98 of the Management Board of the National Depository for Securities dated 13 March 1998,
• financial information specified in §30 of the Rules, and in the case of foreign investment firms - information referred to in §30(3) of the Rules, in the manner specified in sub-paragraph 4 thereof.