KELER CCP - New system rolled out, model change considered a success

Reporting an all-time record growth of 22 per cent in annual sales to HUF 1.91 billion in 2019, KELER CCP, [KELER Central Counterparty Co. Ltd.; KELER CCP] a member of KELER Group providing clearing services, will be servicing energy market customers in a new settlement model. As a result of the change, energy market-customers now can choose from the services of three commercial banks who joint forces with KELER CCP to offer an integrated and more flexible clearing service together. When the new model was launched, KELER CCP had 109 active customers from the energy market, and negotiations are now underway with 10 other potential clearing members. Additionally, the company is seeking opportunities for international expansion in line with its medium-term strategy.

Clearing services provider KELER CCP Zrt., a member of KELER Group, has taken an important step by implementing the project “Settlement Bank Model Change”, which has been online since 1 December 2020. This means in practice that cash account management services for energy market customers are no longer provided by KELER Zrt. but by major local commercial banks — notably, OTP, Budapest Bank, and MKB Bank — on the basis of cooperation agreements concluded with KELER CCP.

More efficient, more up-to-date solution

“Change became necessary, because KELER [KELER Central Depository Co. Ltd.], the Hungarian central depository, could only acquire the so called CSDR (Central Securities Depository Regulation) licence, which aims to regulate central depositories in the EU on an uniform approach, if the company does not provide cash account management services to KELER CCP’s energy market clients. Following a successful model change, the clients can now choose from the services of three banks that signed partnership agreements with KELER CCP,” KELER CCP CEO Babett Pavlics said. She added that partner banks were now competing  for KELER CCP’s energy market clients, who in turn could have a higher standard of customer experience. Also, other financial institutions may join in the future, making competition among partner banks even  stronger. Owing to the new model, KELER CCP established the operational framework with partner banks on the basis of the internationally recognised and widely used SWIFT message standards. Also, processing euro-denominated accounts of KELER CCP’s energy market customers has become automated while individual pricing and funding options are offered by the stakeholder banks making the model even more competitive in the future.

The success of the change is well reflected in the fact that even though KELER CCP had anticipated a 20-percent customer attrition due to the introduction of the new model and consequent administrative burdens, 109 partners out of 120 decided to continue the partnership. “Indeed, we are holding negotiations with 10 potential energy market customers,” Babett Pavlics adds. The change implemented by KELER CCP carries importance for KELER from the aspect that obtaining a CSDR licence is no longer hampered in this regard.