Warsaw, Budapest stock exchanges team up to create new commodity market clearing house

A new clearing house looks set to strengthen and accelerate the development of commodity markets in CEE and SEE.

The Warsaw Stock Exchange (GPW), the Polish Power Exchange (TGE), the Hungarian National Bank and the Budapest Stock Exchange will team up to create a leading Central, Eastern, and South-Eastern European (CEE/SEE) clearing house for commodity markets which can compete with its counterparts in Western Europe.

Known as Central Post-trade Solutions (CPS), the clearing house will also cooperate with multiple local energy and gas markets in CEE/SEE countries by providing services in new projects implemented in this part of Europe.

CPS is set to be operational by the end of September 2022, according to a term sheet signed by the GPW, TGE, the Hungarian National Bank and the Budapest Stock Exchange on December 16.

According to Marek Dietl, the president of the management board of the GPW, the integration of Polish and Hungarian business within CPS will generate synergies in the development of a comprehensive clearing offer for the entire region.

“The potential transaction will allow for the formation of an entity with a comprehensive offer for commodity markets, including markets in electricity, gas and agricultural products,” he says. “The cooperation with our Hungarian friends will allow TGE to introduce new business lines and provide many benefits to other participants in CEE/SEE.”

Jacek Sasin, Poland’s deputy prime minister and minister of state assets, called the initiative “exemplary” and that its large-scale vision and the aspiration to grow internationally “create value for the entire Polish economy”.

International co-operation

Development and growing competition on commodity markets in the CEE/SEE region, including in particular in the area of clearing services, currently pose challenges for entities operating in the market.

To address those challenges, it has long been apparent that international co-operation projects need to be implemented with a view to the development of CEE/SEE commodity markets (mainly energy and gas markets), including in particular the development of post-trade services.

“The agreement signed today and a future investment agreement with the Hungarian partners will create a new quality in post-trade services for commodity markets, mainly for power and gas, in Central Europe. We hope that the new solution we are working on with the Hungarian partners will strengthen and accelerate the development of commodity markets in CEE and SEE and reinforce TGE’s strategic position in the CEE region,” said Piotr Zawistowski, president of the management board of TGE, the only licensed commodity exchange in Poland.

Richard Végh, CEO of Budapest Stock Exchange, meanwhile added that combining Keler CCP (the only central securities depository in Hungary, owned by the Hungarian National Bank and the Budapest Stock Exchange) and IRGiT (responsible for clearing and settlement of the transactions on the markets operated by TGE) would “allow all parties to strengthen their post-trade infrastructure and explore new business opportunities”.

Photo: Warsaw Stock Exchange.

This content has been produced in collaboration with an Emerging Europe partner organisation.