Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 1

Securities Systems* have a primary responsibility to their users** and other stakeholders. They must provide effective low cost processing. Services should be priced equitably.

* Securities Systems = depositories, settlement and clearing systems
** Users = customers of the securities system, and all other parties to whom the securities system owes a duty of care

1.	Is the board that governs the depository answerable to its users?	Yes. The Board members delegated by the Central Bank fulfil both stakeholders of regulatory functions. The delegates from the Budapest Stock Exchange and the Budapest Commodity Exchange represent the exchange members, the main players of the Hungarian capital market. The decision making mechanism of the Board allows a prior consultancy within the framework of the different Exchange committees, the Boards of Exchanges and the Regulators. All public rules and regulations of KELER have to be approved by the Supervision. In this sense KELER's Board is answerable to the users.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	The owners of the Depository are: The National Bank of Hungary (50%), the Budapest Stock Exchange (BSE) (25%), and the Budapest Commodity Exchange (BCE) (25%). The Board of Directors consists of 6 members: two representatives from the National Bank of Hungary, one from BSE, one from BCE, the CEO of KELER and the chairman is an independent representative of the capital market. The representative of the Supervision is constantly invited to Board meetings with no voting rights.
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	There is no direct subsidisation between product groups. There is only one exception, in the area of cash account management services to local brokers and our own treasury activity. When we determine our cash account management fees, we take into consideration our potential income on the treasury side. We must also note that during a pre-defined introduction period of a new product, we try to lower the respective fee and profitability is not a short-term objective.
4.	What process is in place at the depository to ensure that it meets the needs of all its stakeholders (e.g. institutions, broker dealers, retail investors, issuers)?	See under #1 and #2.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	See above.