What is an exchange good for?  What does playing the exchange mean?

An exchange is a marketplace for trading in securities, a regulated market where investment instruments – primarily shares, bonds, commodities and securities derived from these – are bought and sold by investors.

Investors can make their decisions on the basis of public information available simultaneously to everybody. Such information may refer to the company having issued the traded securities or to trading data as well.

The most important role of the exchange within a market economy is that it creates a link between those companies growing and in need of funds and financial investors looking for investment opportunities.

How do I get started? How and where can I buy securities?

Investors use brokerage forms and banks for their investments through the exchange companies trading on the exchange. In the course of dealing on the exchange, sellers and buyers do not contact each other, the deal is made by “matching" the bid and ask prices and quantities.

Companies trading on the exchange provide information on investment opportunities, execute orders for private individuals and manage financial matters relating to investment accounts. You can obtain information on the fees of the different service providers in their client service offices, and most of the companies publish their fees on their websites. In addition, on the website of the Hungarian Financial Supervisory Authority (PSZÁF) you can also find a summary table on the fees of the companies trading on the exchange.

What do I need to buy securities?

Prior to the first purchase of securities, you should sign an agency contract with a selected brokerage firm or bank and open a securities account. This is virtually a routine operation, like the opening of a current account with a bank. When this contract is concluded, it is very important for the investor to clearly understand the contractual terms and to read the business rules of the company. This is the document that contains a description on how the exchange trading company will handle assignments given by the client.

How can we give an assignment to companies trading on the exchange?

The role of the brokerage firm or, in other words, the exchange trading company, is extremely important for the success of the investment, therefore, when its selection is made, we must be as careful as in the decision about the investment itself. A good exchange trading company assesses the needs of its client, gives information on the expected risks, provides assistance in making investment decisions and ensures a continuous flow of information. Accordingly, an important consideration is whether or not the exchange trading company can actually ensure fast and flexible data management, as well as a smooth relationship with the clients.

We can give an assignment to our broker personally, by telephone or via the internet. In this latter case, safe identification of the clients is key, and there is a possibility to do so by using a personal identification code. Several companies trading on the exchange also accept assignments through their internet portals. The most developed form of internet-based trading is when the order enters the exchange trading system directly, through the risk management software of the exchange trading company. In such cases, there will be only a few seconds between the lodging of the assignment and its entering in the system of the Exchange; the order given can be modified or deleted just as quickly. Obtaining information about these possibilities prior to the selection of the exchange trading company is worthwhile.

What fees have to be paid to the companies trading on the exchange?

The companies trading on the exchange apply fees in connection with account management (opening of an account and the account management fee), trading assignments, as well as cash turnover and the use of depository services. For actively trading investors, the most important item is the amount payable for the execution of the order, that is, the commission. Commissions for the trade transactions (deals) executed on the exchange are usually defined as a percentage of the value of the executed transaction.

How does an assignment result in a security?

Companies trading on the exchange are obliged to forward the orders into the exchange trading as soon as possible. If the lodged order can be matched with an order on the other side (that is: a buy order meets a sell order) that is adequate both in terms of price and quantity, then the exchange concludes the deal, according to the predetermined rules. In the case of equity transactions, on the third day after the conclusion of the transaction, the purchased securities are credited to the account of the buyer and the consideration for the purchase is deducted.

How much money do I need to start playing the market?

You can start playing the market with as little as a hundred forints. With a smaller amount, it is worthwhile entering the market through an investment fund, but if we have a larger amount available, we can even conclude direct deals on the exchange. The most important thing, however, is to only invest what we can afford without affecting our day-to-day life: this amount should be at our disposal without any time limitation. An investor should see clearly his own risk acceptance capacity and possibility. To establish its extent, requesting advice from a exchange trading company is recommended.

How risky is an equity investment?

The basic law of financial markets is that in the hope of a higher return, investors shall assume higher risks. Equity investments may promise higher yields than government securities or bank deposits, for instance, and this is exactly why their yields are also higher. This risk means that we might achieve a return lower than the expected yield, and in an extreme case, this may also mean losing the invested money.

What is an investment fund?

For beginners to the market, we especially recommend investing in an investment fund, because these funds collect investors’ money to manage collectively.  This amount of collected assets is called an investment fund, and investors participate in its capital and return proportionate to the investment notes they purchase. The fund manager invests the collected assets in a professional way, into investment assets (such as securities, money market instruments etc.) or into bank deposits, foreign currencies or properties – depending on the investment policy announced earlier. (A property fund, for instance, invests into properties, an equity fund invests into shares.) An investment into an investment fund, therefore, means an investment into some kind of security. The security itself is the investment note, representing a participation in the given fund. One can purchase investment notes directly from the distributors of investment funds (e.g. in bank branches or brokerage firms) or, as the case may be, from agents of the distributors or the fund manager itself. Some of the investment notes are also traded on the exchange, these can be bought from a brokerage firm any time. One of the new products of the BSE is an investment note called BUX ETF, closely following the movements in the BUX index, as also indicated by its name. When this security is bought, the investor shall only follow changes in the BUX index, because in this fund, exactly the securities included in the basket are represented.

What is the BUX index?

BUX index shows, condensed in one indicator, the movements on the BSE equity market and the average changes in share prices. (For instance, an x per cent increase in the BUX index means that equity prices increased by an average of x per cent on a given day.) This is why it is never the current value of the BUX index that is important, but the changes therein. The BUX index is the leading index of the BSE, indicating since 1991 the movements in the shares prices of the largest companies admitted to the Hungarian exchange. The BUX basket may contain at least 12, but not more than 25 shares – an admission thereto is linked to strict conditions. The BSE reviews the compliance with these conditions twice a year, in April and October, and adjusts the composition of the basket, if necessary. The BSE also takes care that price changes of a single share shall not exert an exaggerated impact on the value of the index and, by a special procedure, it reduces the proportion of shares with an extremely high weight.

When does trading take place?

On the Budapest Stock Exchange, trading takes place on each business day from 9:00 to 17:05/17:06 in the different sections.

What protects investors?

In the event that the liquidation of an exchange trading company is decided and the exchange trading company is unable to hand out to the clients the assets (securities, cash) recorded, the Investor Protection Fund (BEVA) indemnifies the investors. But it is extremely rare that this is needed. A good indication for the reliable operation of trading companies on the exchange is that the last time that the BEVA had to act in an indemnification case was in 2001. BEVA pays for the receivables of investors eligible for indemnification up to a level of six million forints, per capita and summed up. The size of the indemnification paid by BEVA is one hundred per cent up to the level of one million, above one million forints, it is one million forints plus ninety per cent of the amount exceeding one million forints.

Where can I find information on the exchange? Where can I find information on the companies listed on the Exchange?

The BSE watches over the continuous accessibility of all information for everybody who is interested in market developments. The exchange trading data are available in real-time, without delay, through the data vendors having contracted to the BSE. On the BSE website, turnover data are shown with a 15 minutes delay both for the equity section and the debt securities section. While data delayed by 15 minutes are available free of charge, real-time data are provided by all vendors exclusively for a subscription fee.

In addition to trading data, it is extremely important to follow the news and notifications regarding the different issuing companies. Assistance is provided in this by the so-called KIBINFO (ISSUERINFO) system, where all information regarding listed companies can be found.

Where can I learn more about the exchange? From whom may I request information?

The BSE organises several open days all over the country, offering programmes for interested people, associated with free training courses. The dates of such open day events are published on the BSE website. If you have questions, you can contact us by email at or by telephone, on (+36 1) 429-6848.

Is it possible to visit the BSE? Can we have a look at the traders shouting on the floor?

Unfortunately, the BSE building is not open to visitors, as exchange trading is effectuated electronically using computers. Also, the place for open outcry stock market trading, the so-called “floor” does not exist any more; the brokers trade from their own offices, through communication lines. For groups, we organise lectures on the exchange and you can request an appointment for these by contacting the Information Center, as below.

Frequently asked questions about information services

Frequently asked questions about Issuers