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

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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

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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)

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Market dynamics reflect global trends

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Turnover in EquitiesBUX index

1997 Asian Crisis

1998 Russian Crisis

1999 Brasilian Crisis

.com bubble

2001-09-11

.com bubble

2003 War in Iraq

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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%

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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

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Debt securities market

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Equity market

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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

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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

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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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Budapest Stock Exchange Limited

Contactinfo@bse.hu

www.bse.hu