Securities law in Hungary is a critical component of the country’s financial and business environment, reflecting the nation’s broader economic landscape. As a member of the European Union, Hungary’s securities regulations are influenced by EU directives and regulations, ensuring a degree of uniformity within the broader European market. However, Hungary also has its own specific legal frameworks and enforcement bodies that oversee securities activities within its borders.
Regulatory Framework
The primary body responsible for overseeing securities law and regulation in Hungary is the Hungarian National Bank (Magyar Nemzeti Bank or MNB). The MNB is tasked with the role of market supervisor, ensuring compliance with both domestic and EU regulations. Securities in Hungary are governed by several key pieces of legislation, including the Capital Market Act, the Securities Act, and various governmental and ministerial decrees.
Hungary’s incorporation of EU directives into its national laws ensures that it adheres to standards such as the Markets in Financial Instruments Directive (MiFID II) and the Market Abuse Regulation (MAR), which are designed to promote market integrity, transparency, and investor protection across Europe.
Types of Securities
In Hungary, securities encompass a wide range of financial instruments, including stocks, bonds, and derivatives. The Budapest Stock Exchange (BSE) is the central marketplace for the trading of securities. Founded in 1864, the BSE plays a pivotal role in the country’s financial markets, dealing in various types of assets such as equities, government bonds, and corporate bonds.
Public offering of securities is tightly regulated. Issuers are required to produce detailed prospectuses which must be approved by the MNB before securities can be offered to the public. These prospectuses must include comprehensive details about the financial status of the issuer, the risks associated with the securities, and any other relevant information that potential investors need.
Financial Intermediaries
Financial intermediaries such as investment firms, brokers, and banks play a crucial role in Hungary’s securities market. These entities must be licensed and regulated by the MNB. They are subject to stringent rules regarding capitalization, reporting, and conduct to ensure they operate in a manner that is fair, transparent, and protects investors.
Market Conduct and Investor Protection
Market abuse, including insider trading and market manipulation, is strictly prohibited under Hungarian law. The MNB has robust monitoring and enforcement mechanisms to detect and punish violations. Companies listed on the BSE must adhere to rigorous disclosure requirements, ensuring timely and accurate disclosure of significant financial information to the public.
Investor protection is a cornerstone of Hungarian securities law. The Investor Protection Fund (Befektető-védelmi Alap or BEVA) offers protection to individual investors against the insolvency of investment firms. BEVA provides compensation for losses up to a certain limit, ensuring a level of security for investors in the market.
Cross-Border Trading
Given Hungary’s EU membership, the country benefits from the harmonized regulatory environment of the European Economic Area (EEA), which facilitates cross-border trading of financial instruments. This allows Hungarian investors to access a wider range of securities from other EU countries under a common regulatory framework, enhancing market liquidity and investment opportunities.
Conclusion
Hungary’s securities law framework is designed to promote a secure, transparent, and efficient financial market. Governed by comprehensive national legislation in alignment with EU laws, the market ensures robust investor protection and market integrity. With entities like the MNB and the BSE playing central roles, Hungary offers a well-regulated environment for both domestic and international investors looking to engage in its securities market. As Hungary continues to integrate and adapt to evolving EU directives, its securities laws and financial market infrastructure are likely to remain integral to the country’s economic growth and stability.
Suggested related links about Securities Law in Hungary:
– Novák Law Firm
– DLA Piper
– Baker McKenzie
– Klusova & Wagner Law Firm
– Schoenherr Attorneys at Law
– KPMG Legal
– EY Law
– CMS Legal
– White & Case LLP