Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 4

Each market must have clear rules assuring investor protection by safeguarding participants from the financial risks of failed settlement and ensuring that listed companies are required to follow sound policies on corporate governance, transfer of economic benefits and shareholder rights.

1.	Does the depository or the market have securities lending and borrowing schemes in place, and are these open to all market participants and their settlement agents?	KELER provides automatic/ pool based and a tri-party securities lending and borrowing services that are open to all direct account holders.
2.	Does the settlement system mark fail trades to market and collect margin from the failing counterparty to protect the innocent counterpart's interest?	Yes, it does.
3.	Does the market operate a guarantee fund or have an equivalent procedure to protect against the cost of failed transactions; and which sectors of the market does it cover?	Yes, it does. KELER operates a collective guarantee fund for both derivatives and spot markets. Besides the collective funds, individual collateral and margin requirements are also needed from clearing members.
4.	Are the stock transfer agents (share registrars) linked electronically to the depository?	Yes, it is option for the share registrars. KELER is not a central registrar by law, however on a for-profit basis provides registry services and is a market leader in this field.
5.	Is there a legal maximum time period to complete ownership transfers in the books of the issuer? If so, does market practice adhere to the deadline?	There is no legal obligation to register ownership transfers at the registry books. In the lack of registration the ownership rights towards the company (such as voting on AGM, entitlement for dividend) cannot be exercised.
6.	Are investors entitled to all benefits arising on a security from the point of purchase; and how are any rules enforced?	No - investors are entitled to all benefits arising on a security from the point when the security is transferred/ credited to their securities account.
7.	Is proxy voting permissible in the market and can such proxies be lodged by post or other remote delivery method?	Yes, it permissible, however the physical attendance of the proxy is needed and the authorized person must have the necessary documents when proving his entitlement.
8.	Are there binding rules in the market stating the minimum and maximum lapsed time between the announcement and completion of key events, including registration, the calling of shareholder meetings, the payment of dividends or interest, rights issues, tender offers and other voluntary corporate actions?	Yes. The rules and regulations of the Budapest Stock Exchange requires all listed companies to announce corporate actions 20 days prior to the event. KELER also has similar standard requirements when managing the corporate actions for the eligible securities in the system.
9.	Are all voluntary corporate actions advised through a central mechanism assuring consistent information to all investors?	Yes. All public companies must announce corporate actions in the official daily gazette of the Exchange, KELER and the Supervision.
10.	Is information on corporate actions available electronically, and is the minimum lapsed time for responding to such actions sufficient to enable all domestic and foreign investors to respond in a timely and considered fashion?	There are no standard and centralized procedures in place, however institutions providing custody services furnish their distinguished and non-resident clients details of all corporate actions electronically. (Mainly using standard SWIFT services) An average domestic investor does not receive the above service. Since issuers have to comply with the local legislative environment, it enables investors to successfully respond to such corporate actions.