Asset and portfolio management
FinTechs belonging to this category offer asset and portfolio management services via an internet platform or software programs and usually manage and dispose of the assets of their customers long or short term according to their specifications without actually holding the property or the possession of those assets. FinTechs, which provide information about and access to overnight or time deposit accounts at national and foreign banks and which execute the transactions to these accounts, also belong to this category. Some FinTechs however only act on request of the customer.
Aside from that some FinTechs offer software or internet solutions enabling users to manage and plan their personal finances on their own by providing graphics, overviews and compilations of their financial data and sometimes indicating financial risks or opportunities, but without actually managing the assets.
Attitude of the country towards modern asset and portfolio management services
The social and political climate is quite neutral towards modern asset and portfolio management services since the volume of these services is very low in the country.
Obligations and requirements to provide asset and portfolio management, or ancillary services described above
According to the Investment Services Act (which is implementing MiFID II in Hungary): (i) Portfolio Management; (ii) reception and transmission of orders; and (iii) execution of orders on behalf of the client in relation to one (1) or more financial instruments on a regular basis qualify as investment services (inter alia), the provision of which in the territory of Hungary is subject to regulatory licensing and supervision by the MNB. Depending on the specific circumstances of the case, offering software or internet solutions enabling users to manage and plan their personal finances (without actually managing assets) may qualify as the provision of Investment Advice (investment service) or Investment Recommendation (ancillary investment service) which are regulated and licensable activities as well. Please note, however, that it shall be examined carefully on a case-by-case basis whether the service provided falls within one (1) of the categories of regulated investment services conducted with respect to Financial Instruments (as defined under the Investment Services Act and the MiFID II Regime).
If a licence needs to be obtained for investment services from the Hungarian regulator, then the fee for the issuance of such licence will be around EUR 2’900. Firms being resident and holding investment services licence in an EU member state may provide investment services in Hungary by way of passporting their relevant licence into Hungary or by way of establishing a branch in Hungary. A third country service provider licensed in its home jurisdiction may provide investment services in Hungary through a branch or a subsidiary established in Hungary. The branch or subsidiary must obtain a local Hungarian license from MNB.
The minimum initial capital of an investment firm is EUR 150’000. However, if an investment firm is licensed for trading on its own account or for the placement of financial instruments, the minimum initial capital is EUR 750’000. If an investment firm is licensed for the following activities: (i) receiving and transmitting client orders; (ii) execution of orders on behalf of clients; (iii) portfolio management; (iv) investment advice; (v) placement of financial instruments without any commitment for the purchase of assets (financial instruments); and it is not allowed to hold client financial instruments and client funds, the minimum initial capital is EUR 75’000.
Further, Hungarian based investment firms and branches of foreign investment firms shall pay a yearly supervision fee of EUR 790 + 6% of their capital requirement + 0.35% of the market value of the assets managed by the respective investment firm.
Additional comments regarding the legal situation for asset and portfolio management services or what FinTech’s must be aware of in this business area
Market size for asset and portfolio management services and biggest companies in this business area
The market for FinTech asset and portfolio management services in Hungary is relatively small. No official data is available regarding the market share of the particular companies.
Additional comments regarding the economic situation for asset and portfolio management services or what FinTech’s must be aware of in this business area