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Hungarian Investor Protection Fund

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The Hungarian Investor Protection Fund (HIPF) is an autonomous legal organisation based in Budapest, Hungary, responsible to compensate investors for losses to a limited extent.

History[edit]

Act CXI of 1996 on the Offering of Securities, Investment Services and on the Stock Exchange (the Hungarian Securities Act) proposed an organisation to be introduced in the Hungarian capital market with the aim to protect investors. The vision of the fund at that time was partly in response to the level of development of the Hungarian capital market, and in part due to the intended admission to the European Union.[1] The organisation was designed to provide indemnity to investors against property damages arising from the potential insolvency of investment service providers.

When the Hungarian Securities Act entered into force on 1 January, 1997, it obliged all operating investment service providers by the force of statute to establish an institution of investor protection. As a result, the Hungarian Investor Protection Fund was set up on April 14, 1997 in alignment with the Hungarian Securities Act.

Operation and assets[edit]

Membership contributions (e.g. prescribed affiliation fee, annual membership dues, extraordinary dues) are the main source of HIPF assets.[2] The fund’s resources are also comprised of yields from the fund’s assets, moneys borrowed by the fund, and bonds issued by the fund. As per Act CXX of 2001 on the Capital Market (the Capital Market Act), the fund’s monetary assets is kept in sovereign bonds.[3]

The sole purpose of the monetary assets of HIPF is to provide coverage to settle compensation claims. For the purpose of repayment of the loan, the fund may also issue bonds.[4] As of 1 January, 2002, the Capital Market Act provides general government guarantee by force of law, should the HIPF need to borrow funds to be able to settle compensation claims as they fall due.

All business organisations which are licensed to engage in covered lines of business by the Hungarian Financial Supervisory Authority are members of the HIPF. Organizations engaged in insured activities must enroll as members of the fund.[5]

The process of compensation[edit]

The fund’s liability of indemnification occurs if the Hungarian National Bank (as Authority) initiates the opening of liquidation proceedings against, or upon a court order for the liquidation of a fund member.[6]

Compensation to eligible investors is paid upon application.[7] HIPF compensates investors entitled to compensation for claims up to a maximum aggregate amount of EUR 100 000 per fund member. The amount of compensation paid by the fund is 100% up to HUF 1 000 000, and for amounts over the HUF 1 000 000 limit, HUF 1 000 000 and 90% of the amount over HUF 1 000 000.

Board of Directors[edit]

The Fund is governed by a nine-member executive board.[8] The term of delegation of the directors is three years.

Name Position Name of nominating or

appointing organisation

András Nemescsói,

Chairman

Partner,

DLA Piper Hungary

KELER Ltd.
Gergő Szeniczey,

Vice Chairman

Director,

Hungarian National Bank

Hungarian National Bank
László Balogh Deputy State Secretary,

Ministry of Finance

Ministry of Finance
Krisztina Kiss Managing Director,

Hungarian Investor Protection Fund

Member of the Board ex officio
Péter Vass Deputy Secretary General,

Hungarian Banking Association

Hungarian Banking Association
Márton Nagy Deputy Governor,

Hungarian National Bank

Hungarian National Bank
Győző Nyitrai Managing Director,

OTP Bank

Investment Service Providers Association
Izabella Tebeli Secretary General,

Ministry of Finance

Ministry of Finance
Richárd Végh Chief Executive Officer,

Budapest Stock Exchange Ltd.

Budapest Stock Exchange Ltd.

See also[edit]

  • Securities Investor Protection Corporation
  • Canadian Investor Protection Fund

References[edit]

  1. "Act CXI of 1996 on the Offering of Securities, Investment Services and on the Stock Exchange: Section 24". Retrieved 2020-01-22. Unknown parameter |url-status= ignored (help)
  2. "Act CXX of 2001 on the Capital Market: Section 222". net.jogtar.hu. Retrieved 2020-01-22. Unknown parameter |url-status= ignored (help)
  3. "Act CXX of 2001 on the Capital Market: Section 227". net.jogtar.hu. Retrieved 2020-01-22. Unknown parameter |url-status= ignored (help)
  4. "Act CXX of 2001 on the Capital Market: Section 226". net.jogtar.hu. Retrieved 2020-01-22. Unknown parameter |url-status= ignored (help)
  5. "Act CXX of 2001 on the Capital Market: Section 210". net.jogtar.hu. Retrieved 2020-01-22. Unknown parameter |url-status= ignored (help)
  6. "Act CXX of 2001 on the Capital Market: Section 216". net.jogtar.hu. Retrieved 2020-01-22. Unknown parameter |url-status= ignored (help)
  7. "Act CXX of 2001 on the Capital Market: Section 217". net.jogtar.hu. Retrieved 2020-01-22. Unknown parameter |url-status= ignored (help)
  8. "Act CXX of 2001 on the Capital Market: Section 223". net.jogtar.hu. Retrieved 2020-01-22. Unknown parameter |url-status= ignored (help)

External links[edit]

The Hungarian Investor Protection Fund official website. Retrieved 2020-01-22.

Board of Directors to the Hungarian Investor Protection Fund. Retrieved 2020-01-22.


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