2013 has been a challenging year so far for Hungary in all aspects concerning banking, naturally this includes GSS.
In this challenging environment, the different players of the Hungarian capital market have been engaged in several projects that take up significant resources on the business and legal side. In addition to these projects, the continuously changing national and EU level regulatory environment keeps service providers and their clients busy. Compliance with regulations such as AIFMD, FATCA, UCITS V and EMIR is integral for UniCredit Bank Hungary and accordingly, our teams are in continuous dialogue both internally and with clients. The preparation process is a top priority for management at our bank and we aspire to act as partners to our clients at all levels.
The market infrastructure also faces some challenges in 2013 and beyond. Just to mention the most important ones, early this year KELER CCP became a full clearing house taking over all clearing related functions from the CSD in addition to the CCP’s previous responsibility of guaranteeing the clearing of the regulated market transactions. This shift entailed capital movements between the CSD and the CCP resulting in a much stronger and financially stable CCP company that is ready to face forthcoming challenges such as EMIR compliance and potential consolidation of clearing service providers.
Furthermore the CSD, KELER, launched its system modernisation programme to replace its 20 year old account management system with a new one that will ensure full T2S functionality by the time the country becomes a T2S member in 2016. This programme is running parallel to T2S preparation and consumes huge financial and human resources and no doubt will bring significant changes to all market players who use or will use KELER’s services.
The majority owners of the Budapest Stock Exchange (BSE) decided a few years back to align the trading platform within the CEE Stock Exchange Group; meaning that BSE, similarly to the other three group member exchanges, shall adopt XETRA. The go live date is fast approaching, early December this year, XETRA starts functioning in Budapest. Some may recall that around making the decision on the new trading platform, CEESEG faced heavy opposition from the Hungarian broker community. Many feared that smaller market players will disappear and be replaced by internationals but it seems all local players have completed the necessary system upgrades to use XETRA and are ready to stay in business as well as face the competition that may come when XETRA opens up the space.
Earlier this year, the government made a decision to merge the Hungarian Financial Supervisory Authority (HFSA) with the National Bank of Hungary (NBH). NBH professionals published a study on similar efforts in Europe and listed pros and cons for different regulatory structures. This study formed the main basis for the government’s decision, and as a result Hungary now has an integrated regulator effective 1 October. With the reorganisation NBH received a third vice-president who is responsible for the microprudential regulatory tasks, including consumer protection. The government’s expectation is that the market will be better monitored and well supervised so that any turbulences or malfunctions can be detected and managed as they occur.
A big challenge for the capital market in 2014 will be the possible extension of the financial transaction tax (FTT) to securities and derivatives transactions. Hungary is not among the EU countries that support the harmonisation efforts on the FTT; however, this year the Hungarian government has already passed some regulations on the subject. These rules are not yet in effect nor is it clear when the government intends to introduce such a tax.
There is no doubt that the upcoming months will bring more challenges in the securities industry but UniCredit Bank Hungary’s Global Securities Services, supported by a strong GSS central team and committed management, will ensure that we continue providing our clients with high quality service and remain their best option in Hungary. Let me take this opportunity to invite you to share your opinions of our services in the upcoming Global Investor and Global Custodian Surveys. Thank you in advance for your valuable contribution.
Lívia Mészáros
Deputy Head
Global Securities Services Hungary