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The Budapest Stock Exchange at a glance
XIII. Logistics Forum, Turkish-Hungarian Business Relations
György MohaiDeputy CEO
February, 2007
2
Overview of the Budapest Stock Exchange• Was founded in 1864 and reopened in 1990
• Demutualization in 2002
• Lean and efficient organization
• Full service range (equity, debt, derivatives, commodities)
• Electronic remote trading system, X-Stream (OM brand)
• CCP on all markets
• Market capitalization/GDP ratio of 33%
• Companies in Category „A” report quarterly and in line with IAS/US-GAP since 1999
3
The Role of the Stock Exchange in Hungary
• Multinationals – A big part of the Top 100 companies are multinationals (Hungarian subsidiaries); they won’t be listed on BSE.
• Big Hungarian companies - are already listed
• State owned big companies – possible form of privatization?
• Companies founded after the transformation – mostly premature for listing
• Developed banking system – an easy way of getting financial sources
4
Structure of the market
Budapest Stock
Exchange
Section member
sBank,
Brokerage houses
Section member
sBanks,
Brokerage houses
KELER
Clearing and settlement
orders orders
Tranding data
Investors
Investors
Supervisory (HFSA, BSE)
5
Market dynamics reflect global trends
0
5
10
15
20
25
Dec-
94
Jun-9
5
Dec-
95
Jun-9
6
Dec-
96
Jun-9
7
Dec-
97
Jun-9
8
Dec-
98
Jun-9
9
Dec-
99
Jun-0
0
Dec-
00
Jun-0
1
Dec-
01
Jun-0
2
Dec-
02
Jun-0
3
Dec-
03
Jun-0
4
Dec-
04
Jun-0
5
Dec-
05
Jun-0
6
An
nu
al
Av
era
ge
Tu
rno
ve
r in
Eq
uit
ies
(E
UR
bn
)
0
5 000
10 000
15 000
20 000
25 000
BU
X in
de
x
Turnover in EquitiesBUX index
1997 Asian Crisis
1998 Russian Crisis
1999 Brasilian Crisis
.com bubble
2001-09-11
.com bubble
2003 War in Iraq
6
Weight of BSE in the region
Market capitalization163 EUR bn, 1,6% of EU
Turnover of Equities80 EUR bn, 0,62% of EU
Source: FESE
Warsaw Stock Exchange
54%
Prague Stock Exchange
21%
Bratislava Stock Exchange
2%
Ljubljana Stock Exchange
4%
Budapest Stock Exchange
19%
Prague Stock Exchange
45%
Warsaw Stock Exchange
30%
Budapest Stock Exchange
24%
Ljubljana Stock Exchange
1%Bratislava Stock
Exchange0%
7
The turnover of the BSE in ‘04-’05-’06Daily average turnover
on the spot market:EUR 125 million in 2007EUR 105 million in 2006EUR 81 million in 2005EUR 46 million in 2004EUR 35 million in 2003
Derivatives market turnover up 116% in 2005 and 40% in 2006
Derivatives market turnover hits the turnover of the spot market’s
0,000
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Jan-
04Fe
b-04
Mar
-04
Apr
-04
May
-04
Jun-
04Ju
l-04
Aug
-04
Sep
-04
Oct
-04
Nov
-04
Dec
-04
Jan-
05Fe
b-05
Mar
-05
Apr
-05
May
-05
Jun-
05Ju
l-05
Aug
-05
Sep
-05
Oct
-05
Nov
-05
Dec
-05
Jan-
06Fe
b-06
Mar
-06
Apr
-06
May
-06
Jun-
06Ju
l-06
Aug
-06
Sep
-06
Oct
-06
Nov
-06
Mill
ion
EU
R
Debt securities market
Derivatives market
Equity market
8
Strategy: vertical and horizontal integration
• joint data and information vending
• joint index license sales strategy
• harmonization of corporate governance recommendations
• Integration with the Budapest Commodity Exchange completed
• BSE is in strategic alliance with Wiener Börse
9
Market strategyMaintaining and widening close relationship with foreign investors (currently hold app. 80% of shares)
• Supporting the growing domestic fund management business
• Image campaign• Providing education and information for
individual investors
Enhancing domestic interest
10
Attracting new issuers
• Amendments to the Capital Market Act and the Exchange rules made access easier to the exchange
• Attractive fee structure
• Keeping in touch with potential newcomers (Club of Quotables)
• Funds are available to contribute to the cost of going public
11
Product development successes at BSECash market
BUX tracking ETF – December 2006
Derivatives marketGold futures - April 2006Continuous product development on FX and
single stock market
12
Current and future challenges
Opening the market
MiFID
International integration
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