History
The Hungarian Stock Exchange, the ancestor of today's Budapest Stock Exchange (BSE) started its operation on 18 January 1864 in Pest on the banks of the Danube, in a building of the Lloyd Insurance Company. The committee in charge of setting up the exchange was led by Frigyes Kochmeister, who was also elected as the first chairman of the exchange (1864–1900). When the exchange was launched in 1864, there were 17 equities, one debenture, 11 foreign currencies and 9 bills of exchange listed. After a few years of slow growth, 1872 saw the first significant market boom, when the Minister of Trade approved the articles of incorporation of 15 industrial and 550 financial companies whose shares were then listed on the exchange. The BSCE moved into a new building in 1873 and until 1905 continued its operations in a building on the corner of Wurm Street (now Szende Pál Street). In 1905 it relocated to the Exchange Palace on Liberty Square.
The first real market crash of the exchange occurred in May 1873. The early 1890s marked another period of spectacular market boom in the exchange's history, partially fuelled by a general investment optimism that was characteristic of the Millennium years, and by recent trends in the international stock markets. Following 1889 the stock prices of companies listed on the Budapest Stock Exchange were also published in Vienna, Frankfurt, London and Paris. From the 1890s Hungarian government bonds were regularly traded on the stock exchanges of London, Paris, Amsterdam and Berlin.
By the turn of the century, there were already 310 securities traded on the exchange; by the beginning of World War I, this increased to almost 500. The annual turnover in 1913 reached one million shares and the turnover of the Budapest Giro and Mutual Society amounted to 2.7 billion Crowns (the ancestor of the Forint). At the same time there was also a dynamic expansion in grain trading with almost 400,000 tons in 1875, growing to one million tons by the turn of the century and close to one and a half million tons by WWI. As a result of this expansion the BSCE was propelled to become the leading grain exchange in Europe.
As in most European countries, the outbreak of World War I brought about the exchange's closure on 27 July 1914, although trading did not cease. Brokers continued trading during the war and equity prices showed a massive increase starting in 1914. By 1918 over 7.2 million securities had been traded in a year. The exchange reopened after the war were, the post-war inflationary environment pushed exchange turnover to exceptional highs, tempered only by the introduction in 1925 of the country's new currency, the pengő. The following four years leading to the market crash of the New York Stock Exchange in October 1929 saw the downturn of the BSCE. On 14 July 1931, the BSCE was closed down again as a result of a German banking moratorium and a series of financial collapses of the continent's major banks. Bond trading officially resumed only in 1932, followed by trading in the 18 most traded equities. Following a short period of recovery, the market entered an expansionary phase in 1934, reaching its peak in 1936. Gustav Szabo became the youngest person ever to have a seat on Budapest Stock exchange at 18 years old when his father died in 1939.[13]
When Hungary entered World War II, the exchange saw a period of unprecedented boom, and equity prices in the heavy and military industries increased manifold. In 1942 the government applied stricter measures for the BSCE articles of incorporation and set maximum values on daily price changes. Despite these restrictions the exchange was able to continue its operations until the start of the city's siege in mid-December 1944. World War II was followed by a period of hyperinflation, characterized by a lively private stock and real exchange trading in currencies and precious metals, conducted partially in the damaged building of the exchange. The exchange officially re-opened in August 1946, following the launch of the forint on August 1. As companies defaulted on their payments of bonds issued previously in the crown and pengő currencies, and since limited companies failed to pay dividends on their stocks due to the war damages they suffered, prices kept falling. Two months after the 1948 nationalisation of the majority of private Hungarian firms, the government officially dissolved the Budapest Stock and Commodity Exchange, and the exchange's assets became state property.
The first milestone in the re-open of Budapest Stock Exchange was the Government of Hungary's decision to give green light for the preparation of the Securities Act of 1989.[14] The draft bill was submitted to Parliament in January 1990 and came into force on 1 March. At the same time that the bill came into force on 21 June 1990, the BSE held its statutory general meeting and the Exchange re-opened its doors. With 41 founding members and one single equity, IBUSZ, the Budapest Stock Exchange was set up as a sui generis organisation, an independent legal entity. The re-establishment of the market economy during the same time and the privatisation of businesses played a decisive role in the exchange's operations. Even though the sale of the larger state-owned businesses often involved the assistance of strategic investors, the BSE played a significant role in the privatisation of many leading Hungarian companies including Rába, MOL Group, OTP Bank, Magyar Telekom, Danubius Hotels Group, Richter Gedeon Co., IBUSZ, Skála-Coop, Globus and more.
The first trading floor was in the Trade Center on Váci Street, followed by its move in 1992 to the atmospheric old building at Deák Ferenc Street in Belváros-Lipótváros, where it continued its operations for 15 years. In March, 2007 the BSE moved to the former Herczog Palace at 93 Andrássy Avenue. The Open outcry system of the physical trading floor that characterized the spot market functioned with partial electronic support until 1995. From 1995 until November, 1998 securities trading took place concurrently on the trading floor and in a remote trading system, when the new MultiMarket Trading System (MMTS), based entirely on remote trading was launched. The traditional “battlefield rumble” of the physical trading floor ceased within a year by September 1999, at which time physical trading was entirely replaced by the electronic remote trading platform of the derivatives market. Derivatives market of the BSE in futures and options contracts has been available to investors since 1995. BUX contracts have been available for trading since the start of the futures market on 31 March 1995. In July, 1998 the BSE was among the first exchanges in the world to introduce contracts based on individual equities. Another series of standardised derivatives in the options market appeared in February, 2000 and on 6 September 2004 trading commenced in the exchange's second index, the BUMIX. In January, 2010, BSE became a member of the CEE Stock Exchange Group.
On 6 December 2013, on the occasion of the exchange's new trading platform launch the stock exchange trading was ceremonially opened by Mihály Varga, Minister of National Economy. That day the new Xetra trading system replaced the system that has been in use for 15 years. In February 2015 the BSE moved to new premises in Liberty Square. On 20 November 2015 the Hungarian National Bank concluded a sales contract with the Austrian CEESEG AG and Österreichische Kontrollbank AG, the entities that to date held a 68.8 per cent ownership in BSE.[15] The BSE currently operates in the Buda Centre of the Hungarian National Bank on Krisztina Boulevard.[16]
In its strategy for the period 2021–2025, the Budapest Stock Exchange outlined its earlier efforts to develop the domestic capital markets. According to this, the BSE's goal remains to increase the role of capital markets in Hungary and to support the growth and competitiveness of companies, taking into account sustainability aspects, thus ensuring the prosperity of Hungarian households.[17]
On 21 June 2023, the 33rd anniversary of its re-establishment, the Budapest Stock Exchange went public. The purpose of the listing is to promote the benefits of public operation among domestic medium-sized companies, while supporting the objectives of ownership and the international ambitions of the Exchange.[18] The Hungarian National Bank, however, maintained its dominant equity stake at 81.35 percent, unchanged from its level before listing.[19]
On 23 August 2023, the company formed EuroCTP as a joint venture with 13 other bourses, in an effort to provide a consolidated tape for the European Union, as part of the Capital Markets Union proposed by the European Commission.
