Although the role of capital markets in the Hungarian economy – even relative to its level of development – is limited, there has been a growing demand for capital market financing in recent years, new asset classes have emerged, and thanks to these processes also catalyzed by the BSE, the stock exchange has achieved significant results in strengthening the ecosystem and developing new products. Despite the high interest rate environment - both internationally and domestically - that emerged in 2022, as well as uncertain geopolitical and macroeconomic factors, the BSE maintains a strong position in this market and is expected to be one of the main beneficiaries of future capital market growth.

At the same time, the BSE faces challenges: economies of scale are one of the main drivers of the consolidation trends observed in the sector, but the current size of the Hungarian capital markets poses a significant constraint on the shift of the business model toward data solutions and on technological innovation. Within the value chain, value creation is steadily shifting toward information technology, data, energy market products, as well as depository and central counterparty activities, leading to a relative devaluation of primary and secondary market business models. Furthermore, competitive pressure in this area has also intensified. However, these risks also present opportunities: the current underdevelopment holds the potential for significant organic growth; the BSE is placing greater emphasis on regional cooperation, where several exchanges find themselves in a similar situation, which could also result in revenue and cost synergies.

Listed on the Stock Exchange

In addition to the many positive effects of being listed on the stock exchange (efficiency, transparency, a broad shareholder base, fundraising opportunities, PR and marketing benefits), listing on the BSE is also a milestone in the achievement of the owner’s strategic goals. The majority owner, the Hungarian National Bank, intends to reduce its stake in the BSE in the future and, under appropriate market conditions, attract new investors and engage them in the success of the Hungarian and regional capital markets. The BSE’s listing would be one of the first steps in this process.

New Business Lines and Services

In the context of index development and other new stock exchange services (such as data provision), ESG considerations will play a prominent role in the future for both the equity and fixed-income asset classes, whether we look at the BSE’s current indices or potential new ones. The topic of sustainability is becoming increasingly prominent both in Hungary and abroad. The stock exchange supports this process in the domestic capital market in two ways. On the one hand, as a central player in the capital market, the BSE is tasked with catalyzing change and participating in the development of a green, sustainable capital market. On the other hand, it also aims to open up to private capital markets with the launch of the new BSE Xmatch private placement platform.

Further Enhancing the Role of the Capital Market

We expect that large corporations with decision-making centers in Hungary will also make greater use of capital market solutions than before to provide a financial foundation for their strategic decisions. In addition to revitalizing the stock market, the development of the Hungarian corporate bond market is also of key importance, while increasing revenues not related to equity trading remains a priority.

Regional and Industry-Specific Collaborations

The consolidation trends among European infrastructure providers, coupled with the region’s growing economic significance, present the Budapest Stock Exchange with a key strategic opportunity that warrants exploring various froms of collaboration in the Central and Eastern European region.

IT Innovation and Security

The BSE’s strategic goal for information technology is twofold: it is equally important to support the implementation of the business strategy and to comply with regulatory requirements pertaining to information technology. To ensure that we can manage these two objectives appropriately, we strive to select hardware and software solutions for our core infrastructure that support IT operations in a reliable, automated, and secure manner. To ensure the high availability required by the organization’s market critical infrastructure role and the associated high quality standards, we have continued to build our IT infrastructure using IT solutions from market-leading manufacturers.