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KELER Functions & Services
General overview
Mr. Tamás Madlena
director
Marketing and Customer Relationship
Budapest, 22 May 2003
Introduction
• 1990:
Re-opening of Exchanges
• 1993:
KELER foundation
• Ownership structure:
Budapest Commodity Exchange
Budapest Stock Exchange
National Bank of Hungary
25%
25%
50%
2
Growth of Shareholders’ Equity
In Million EUR, 1993 – 2002
60,00
50,85
50,00
40,00
30,00
20,00
10,00
0,00
2,12
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002*
3
Organizational structure
Supervisory Board
Shareholders' Meeting
Independent
Auditor
Board of Directors
Internal Audit
Foreign Relations
Chief Executive
Officer
Legal Counsel
Risk Management
IT
Business Development
Treasury
Operations
Marketing and Customer
Relations
Depository
Share Registry
Accounting
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Participants
• Basic distinction
- Safekeeping and settlement of OTC („administrative”
requirements by KELER)
- Clearing (capital and collateral obligations)
• Eligible entities
- Investment service providers (broker/ dealer)
- Credit institutions (custodian bank)
- Issuers
- Foreign CSDs, ICSDs
- National Bank of Hungary
- State Debt Management Agency, State Treasury
- Other
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Fields of Core Services
• Central Securities Depository, custody
• Clearing and settlement for both Exchanges
(spot and derivatives markets)
• CCP
• RTGS for the OTC market
• Cash and securities account management
• Cross-border settlements
• Share registrar
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Depository
• National depository
• Central securities registration, ISIN allocation
• Collective safe custody and fungibility for
physical securities
• Custody services, handling of corporate actions
• Growing immobilization
• Dematerialization through KELER (deadline for
public companies: end of 2004)
• 17f-7 eligibility
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Net Clearing and Settlement
•
•
•
•
BIS model 3, net securities/net cash
Multilateral netting
BSE trading
Settlement cycles:
– T+2 for bonds
– T+3 for equities
• Settlement between 8.15-9.00 a.m. SD
• Dedicated own/client securities settlement
accounts
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Derivatives
Clearing and Settlement Procedures
• Matched trades received from exchanges
(real time/EOD batch), settlement price EOD
(per product/expiration)
• Allocation (at trading level/after trading),
Give-up, Option exercise
• Clearing & comfirmation on T+0
• Settlement on T+1 8.00 a.m. – variation
margin settlement in cash, initial margin
settlement in gov’t securities/cash
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OTC - Gross Clearing and Settlement
•
•
•
•
Trade-by-trade BIS model 1 settlement
SFI DVP
Real-time processing between 8.15-16.00
Markets served:
– off-exchange trading and post-trading settlement
(broker/custodian)
– Budapest Stock Exchange block trading
– BSE auctions trading
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Cross-Border Settlements
• Outbound
– Foreign currency DVP
– Clearstream account / forwarded services
– Automation (KID + SWIFT)
– 25-30 % market share
• Inbound
– Standard custody
– Clearstream, OeKB, JP Morgan (ADR)
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Share Registrar
• No central registry in Hungary
• KELER as market leader
• Not a continuous recording - updates for
corporate actions
• STP with CSD
• Value added services
– Dividend payments
– General Meetings
– Administrative support
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Lending and Borrowing
• Automatic
– Supporting Stock Exchange Settlements
– Pool based
• Tri-party
– KELER managing collateral
• KELER as principal
– Lending desk
– Flexibility
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Repo Transactions
• Two types
– Hold-in-custody
– Delivery
• Mainly government securities
• Real time processing
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FoP Securities Transfers
• Two types
– Without matching, delivery instruction only
– With matching
• Widely used
– Segregation
– Securities leg of against payment transactions (not
DVP, a separate GIRO cash transfer needed)
• RTGS and batch processing
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Collateral Management
• Linked to several services
• Marked to market daily
• Special arrangements for the Central
Bank as beneficiary (handling
commercial bank limits)
• New module in May 2003
– Eligible instruments added
– „Collateral for third parties”
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