Investment incentives

Thu, 31/03/2016

The Budapest Stock Exchange presented its strategic plan for the upcoming five years. By Beáta Szőnyi, Senior Relationship Manager, GSS Hungary

                                                               
With the aim of boosting the Hungarian capital market in mind, the management of the Budapest Stock Exchange (BSE) announced its new strategic plan for the upcoming five years. It includes a full scale development programme targeting the capital market as well as the Stock Exchange itself, including incentives for both issuers and investors (e.g.: tax benefits) and the goal to increase the capitalisation of the stock market to 30% of GDP from the current app. 13%.

The main objectives of the plan are:

  • to have at least five listings (equities or bonds) per year on the BSE;
  • to increase the number of the most liquid companies on the BSE to five;
  • to partially list certain state owned companies on the BSE;
  • to create a so-called “BSE Anteroom” including companies that could potentially be listed on the BSE – with the active cooperation of the BSE’s IPO partners that participate in the collection, the selection process and in the preparatory work of the companies for the listings (aim: 50 companies & 10 IPO partners).
  • to create an SME market with the following elements:
    • a Multilateral Trading Facility (MTF) for those companies that do not yet meet the standards required for listing;
    • a Private Placement Platform (PPP) for companies that have not yet gone public, however are looking for capital investors with whom they may have individual transactions and that could possibly be directed towards public markets later on;
    • as a future plan a crowdfunding platform may be launched under a separate brand name differentiating it from the other BSE markets, with the aim to provide financing to start-up companies and projects by attracting larger numbers of investors with smaller-sized investments.

Market development

Additionally, as part of the strategic plan, the BSE is in consultation with the Ministry for National Economy to prepare a regulatory package supporting the development of the Hungarian capital market.

The most important features of the proposed package include:

  • the fine-tuning of listing and issuance processes, as well as the provision of certain benefits related to stock exchange presence;
  • a provision of incentives to Hungarian investors to raise the share of local stocks in their securities portfolio by reducing administrative and other burdens related to equity exposure;
  • propelling market liquidity by supporting investment service providers’ market making and research activities.

In regards to its trading platform, the BSE does not plan any changes, meaning the Xetra system will remain in place.

Finally, the BSE will continue to focus on improving the reputation of issuers on the stock exchange and on tightening the BSE's system of monitoring and sanctions in order to enhance the safety of minority shareholders. Also, through wide range educational programmes, institutional roadshows, conferences and active relationships with domestic and foreign investors, among others, the BSE‘s goal is to further improve the financial culture in Hungary.