Sources: CCP.RO did not respond to BRM's software offer for the Central Counterparty. Why?

The management of CCP.RO Bucharest recently had a proposal for another software to ensure the functioning of the Central Counterparty, according to our information.

The Romanian Commodity Exchange (BRM) facilitates transactions with derivative instruments that have energy products as the supporting asset, in a central counterparty system, based on a software application that ensures the compensation and guarantee of exchanges, operational in the natural gas market since 2019. The system is in in accordance with the specific provisions of the field in the European Union, it operates under the supervision of the National Energy Regulatory Authority (ANRE) and with the recorded agreement of the Financial Supervisory Authority (ASF), according to our information.

Asked by Ziarul Bursa if they looked for other options for the CCP's technological solution or received offers in this regard, the representatives of the Bucharest Stock Exchange (BVB), the majority shareholder of CCP.RO Bucharest, told us that the software solution proposed in the business plan is the only one that can facilitate the authorization of the Central Counterparty file within the currently existing terms.

"All the investigated solutions had the main purpose of falling within the deadlines of the authorization process of the Central Counterparty, already initiated in January 2023. The solution proposed to the shareholders is the only one identified that facilitates the authorization of the file within these deadlines, this solution presupposing the continuity of the technology used and tested already in the initiated authorization process. The implementation of any other technological solution would certainly lead to the need to restart a new authorization process of the Central Counterparty, preceded by a period of adaptation of the authorization file and technical implementations in accordance with the new technology, a process that would generate a postponement of the implementation of the Counterparty Central for at least two years", BVB representatives told us.

According to our information, the software solution used by BRM has been proposed for use in the Central Counterparty project, but no concrete result has been reached.

• The software application used by BRM was made with in-house resources, according to sources close to the situation

The business plan of the Central Counterparties project in our country, which recently received the approval of the shareholders for a capital increase of five million euros, involves the use of a software solution that should work under the Euronext license, but provided by another entity, which will also ensure the maintenance part and further developments of the platform. This after, in the spring, Euronext Clearing announced its intention to withdraw from the contract with CCP.RO, recommending another service provider for the continuation of the Central Counterparty project, but under different conditions and at higher costs.

In our country, BRM facilitates the trading, in the central counterparty system, of forward and futures contracts with asset-backed energy products, to the extent that they are requested, with physical delivery.

According to our information, the software application used by BRM was built with in-house resources as per specifications provided by the exchange. Belongs to BRM, can be integrated into the Central Counterparty project and extended to cover, in addition to physically settled energy products, specific post-trading services of financial asset futures contracts. There were no syncopes in the operation of the system, the application proving robust even in extremely volatile moments for the energy markets, such as the crisis period of 2021-2022, when prices had massive oscillations.

BRM sources told us that the respective software was proposed, through a BVB shareholder, to the management of this institution, but, unfortunately, "total silence" followed.

"We don't know the reasons why they didn't want to use the software we created. They probably want a software that foreign investors who are also present at the BVB know and can access more easily. Although we believe that CCP.RO could create its own software and not take it from somewhere else. If CCP.RO had its own software or had taken over our software, the maintenance and upgrading expenses would have been much lower over time than those they will probably pay to the company from which they will purchase the software for the Central Counterparty. However, we assure you that the software proposed by BRM is fully operational and that it fully meets the requirements of the market", sources from the Romanian Commodity Exchange told us.

• CCP.RO shareholders approved, at the beginning of the month, a capital increase of five million euros

At the beginning of this month, the shareholders of CCP.RO Bucharest approved the updated Business Plan of the Central Counterparty, the capital increase of the company by five million euros, the license contract with Euronext Clearing and the contract with the new technology service provider. Of the five million, three million euros represent the contribution of the BVB.

The new deadline by which CCP.RO must submit the complete file for authorization to the ASF is December 8. Adrian Tănase, the president of the company, stated in an interview to the Bursa newspaper that, in order for the file to be complete, CCP.RO must provide, in addition to the shareholders' agreement for the new coordinates of the project that was obtained, a series of reports on proof of system tests on the new operating structure.

Thus, if initially the technology had to run on the Euronext infrastructure, now it should run on the CCP.RO infrastructure, for which the necessary equipment has already been purchased, said Adrian Tănase. The president of CCP.RO estimated that the entity intended to function as a central counterparty in our country will be operational in the second part of next year.

According to the updated Business Plan, the capital paid by CCP.RO shareholders up to now is 19.7 million euros, so that, taking into account the additional contribution of five million euros, it reaches 24.7 million euros.

The central counterparty is an entity necessary for the launch of derivative financial products in our country. Practically, the CCP intervenes between the market participants, becoming a counterparty for each of them. This guarantees both the buyer and the seller the completion of the settlement of the transaction.