Canada    FinTech Guide    Chapter 3    Hungary

3. Consulting and Broking Services / Robo-Advisory / Auto-Trading
Hungary  Hungary

There are some reservations, however, as in the recent past the public has seen a number of unauthorized / fraudulent players approaching the FX trading and robo-advisory markets.

Legal Affairs

The provision of Investment Advice/consultancy and broking services basically qualify as investment services and as such, these activities are subject to licensing or passporting requirements in the territory of Hungary if provided on a regular basis. Persons providing investment advice services in the course of providing another professional activity not covered by MiFID and provided that the provision of such advice is not specifically remunerated are exempted from the regulated Investment Advice services. Further, the Hungarian Investment Services Act exempts publicly available information, facts, circumstances, studies, reports, analyses and advertisements of the definition of Investment Advice and also the prior information provision that investment firms are obliged to provide to their clients and any subsequent changes to that information. The service of Investment Recommendation however qualifies as an ancillary investment service and is subject to licensing/passporting requirements.

Companies offering FinTech-advertising services may qualify as agents of the investment service providers and must be reported to (but not licensed by) the MNB.

Regarding robo-advisory and auto-trading, the Hungarian Investment Services Act is implementing the new MiFID II regulation regarding undertakings operating algorithmic trading techniques extending the scope of risk management and controlling regulation to undertakings operating algorithmic trading platforms. Further, undertakings operating high-frequency algorithmic trading platforms (as defined under MiFID II and the Investment Services Act) must be licensed as of January, 2018. The categories of other investment services shall also be examined in these cases depending on the specific circumstances (i.e. Portfolio Management, Investment Advice or Investment Recommendation).

We hereby refer to MiFID II and MiFIR regulation effective as of January 2018 in Hungary that will affect the business of investment advice, broking, robo-advisory and auto-trading service providers (i.e. algorithmic trading rules, suitability statement, concept of the independent basis investment advice, etc.)

Economic Conditions

Currently, the size of this market is quite small, the first robo-advisor company, Blueopes started around mid 2016.

Contributing Authors

Lakatos, Köves & Partners

Richard Lock
Budapest, Hungary

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Chapter Index:

1. Payment Services / Mobile Payment

2. Asset and Portfolio Management

3. Consulting and Broking Services / Robo-advisory / Auto-trading

4. Trading Platforms / Social Trading Platforms / Signal Following

5. Crowdfunding / Crowdinvesting / Crowdlending

6. Virtual Currency - Bitcoin

7. Loan Services / Factoring / Loan Broking / Finetrading

8. Online Banking Services

9. Analytics and Research / Data Management / Risk Management

10. Accounting

11. Identification

12. Online-pawning

13. InsurTech

14. RegTech

15. Initial Coin Offerings (ICOs)

The information in this guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: 1 May 2018