Hungary has recently adopted several amendments to Act CXII of 1996 on credit institutions (the Banking Act) and Act CXX of 2001 on capital markets (CMA). The Acts provide an integrated legal framework for the activities of financial and investment service providers and their supervision. The changes were triggered by comments from market participants and practitioners and also by the EU accession requirements.
The most notable modifications to the Banking Act include the abolition of the maximum 50% regulatory limit regarding single bank financing of company acquisitions. The conditions for outsourcing certain activities by the financial service providers have also been clarified. In addition, as a result of related mortgage lending structuring experiences, the trading in "autonomous" charges has also been recognized as a loan making activity subject to regulatory control. Finally, the supervisory control of the integrated supervisor (PSZÁF) has been defined in greater detail, and the scope of the supervision has been widened considerably.
The changes to the CMA have successfully tackled numerous problems identified in the past two years. As a result, it is no longer required that several tranches of a bond programme undergo a quasi approval process. Furthermore, several disputed issues regarding dematerialized securities and the supervisory functions of PSZÁF have been resolved.
However, there are many important questions not yet settled. For instance, the lack of clarity regarding the definition of cross-border investment services causes legal uncertainty.
Attila S Horváth