Settlement process - Hungary

26.03.2015

Settlement cycles

Stock Exchange cash market trades:

Equities:T+2
Debt instruments (including government bonds):T+2

OTC trades:

All eligible instruments:From T+0 to T+15, negotiable by the counterparties

Note: KELER Ltd provides an RTGS against payment environment for OTC trades that can also be used for free of payment transfers.

Settlement flow

SD:
08:00RTGS system opens.
intradayInstructions are pre-matched with counterparty (via telephone, email, fax) and the proprietary system of the CSD.

If an instruction is pre-matched successfully. it is released into the CSD system for settlement.
until 17:30Against payment instructions can be released and settled.
18:00Free of payment instructions can be released and settled.

Registration

Nominee registration is accepted for equities in the Hungarian market.

Hungarian law does not currently recognise the nominee concept for Hungarian debt securities and the account owner is regarded as subject to interest tax.

If no separate beneficial owner is specified, the registration of equities is usually performed directly in the name of Clearstream Banking Luxembourg Nominee. Registration is performed based on settled record date positions before corporate actions or upon requests of the issuers to update registry book. The record date for equities is usually event date -5 and for government securities event date -2.

Key dates

For dividend paymentsFor interest payments
Cum-datePD-7PD-4
Ex-datePD-6PD-3
Record DatePD-5PD-2
Payment DatePDPD

Countervalue difference allowed by the market

A matching tolerance of HUF 5000 or equivalent is allowed by the CSD’s system. In the event of a discrepancy, the cash amount of the receiving counterparty will prevail.

Penalties

Penalty for late settlement at the Budapest Stock Exchange cash market (Not applicable for OTC transactions)

In respect of the defaults of the spot market, KELER CCP operates compulsory mechanisms depending on the reason of the (financial or securities-side) default.

The penalties for the clearing member for non-performance are as follows:

  • HUF 200,000 late fee if it cannot deliver the cash by 14:00 on SD, plus an additional HUF 600,000 default basic fee if the cash default lasts more than one day;
  • HUF 200,000 late fee if it cannot deliver the securities by 14:00 on SD, plus an additional HUF 600,000-2,000,000 per day securities default basic fee if the securities default lasts more than one day;
  • A securities default surcharge, calculated as:
    (National Bank of Hungary base rate/year)*2
    with a minimum of HUF 50,000, if it cannot deliver the securities by 16:00 on SD;
  • Extra margin call (120% of the non-delivered securities).

Buy-in

If the defaulting party does not fulfil its obligations by 11:00 on SD+2, a buy-in is initiated at a cost of HUF 300,000 for the buy-in (on SD+2 at the latest) plus an additional charge for the buy-in transaction.