BSE EGM approves joint new trading system of Deutsche Börse-NYSE/Euronext


The trading system replacement project will start in January 2012, the earliest. The general meeting will decide on the exact business model at a later time.

A day earlier, Hungarian investment service providers announced that they seek the assistance of the Hungarian Financial Supervisory Authority (PSzÁF), the National Bank of Hungary (MNB) and the government with regard to the introduction of the Xetra trading system to the Budapest Stock Exchange (BSE).

The investment service providers, namely Buda-Cash, Concorde, Equilor, Erste, and ING Bank's Hungarian branch, said they would have to use both the new trading system and the old one at the same time, which would be a lot more expensive and complicated. The new system would also give foreign brokers unrestricted access to the Hungarian capital market, putting domestic brokers at a disadvantage by adversely affecting the trading volume of Hungarian firms. They claim that this would, in turn, mean the loss of hundreds of jobs and a reduction in the country’s tax revenues.

In addition, the ongoing merger between Deutsche Borse and the NYSE-EURONEXT could require the BSE to adopt another new trading system as early as the end of 2013, the brokers said. The Deutsche Borse uses the Xetra system, but the EURONEXT platform is likely to be adopted when the merger is completed, managing director of ING Bank's Hungarian branch Zsolt Katona explained. Therefore, the introduction of the Xetra system should be delayed until the Deutsche Borse NYSE-EURONEXT merger is completed, he added.

BSE chairman resigns

In a first attempt, the investment service providers asked BSE chairman Mihály Patai to postpone the decision until December 31, 2011. However, Patai resigned on September 5 because of a failure to reach a consensus on the introduction of the Xetra system. A day after, supervisory chairman Róbert Cselovszki also resigned to avoid a conflict of interest.

Patai, who is also chairman and CEO of UniCredit Bank, has been chairman of the BSE since December 4, 2008. He was re-elected on April 29, 2011.

Alternative bourse

“The moment might come to dust off those plans,” said Bálint Szécsényi, the CEO of brokerage house Equilor, when asked about earlier rumours of an alternative bourse. 

There have been several rumours about the establishment of an alternative stock exchange in Hungary. Although no one has taken these seriously, according to an amendment passed in January, the “relocation” of shares from one exchange to another will be both easier and cheaper. There were a couple of major Hungarian companies that felt threatened by the Austrian owner and they wanted to ensure a way out for the worst case scenario, such as the acceptance of a hostile takeover attempt.

Vienna bourse prolongs Xetra agreement

In June, the Vienna Stock Exchange prolonged the Xetra agreement for its cash market electronic trading system ahead of time for a further period of five years, until 2017. Agreement was also reached to assure that all future modifications and innovations to the trading systems of Deutsche Börse will be implemented simultaneously on the Vienna Stock Exchange. 

The cash market of the Vienna Stock Exchange has been running on the Xetra platform as of November 1999. Since December 2009, the Central European Gas Hub has also been operating on the Xetra under a license agreement with the Vienna Stock Exchange. 

After the Vienna Stock Exchange, Xetra was implemented on the Ljubljana Stock Exchange in December 2010, and Prague and Budapest are expected to follow suit. Having a common trading platform instead of four different systems would lead to cost savings and higher revenue, according to the Vienna bourse. The four stock exchanges of Vienna, Budapest, Ljubljana and Prague were integrated as subsidiaries into the holding company, CEESEG AG, in January 2010.

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