The Central Clearing House and Depository Private Limited Company (KELER Ltd.) is the key institution of the functioning of the Hungarian money and capital market infrastructure.
As a clearing house, KELER Ltd. clears and settles stock market transactions concluded on the Budapest Stock Exchange, on the basis of an agreement, and carries out settlement of over-the-counter, i.e. OTC transactions. As regards the clearing of on-exchange spot and derivative transactions, the parties are in connection with the KELER Ltd. as a Central Counterparty (CCP) who, entering into the transaction, absorbs the potential risks arising from non-performance by the parties and guarantees settlement to both of the parties concerned.
The settlement of both the stock market and OTC transactions occurs under the principle of delivery versus payment (DVP): securities settlement will take place only and exclusively in the case that the cash leg of the securities transaction has already been settled. While settlement of OTC transactions occurs on a gross basis item by item, the settlement of spot stock market transactions, both the securities and the cash settlement is carried out on a net basis, by application of multilateral netting. Securities settlement takes always place on securities accounts managed by KELER, while cash settlement occurs either on cash accounts managed by KELER or – in the case of credit institutions belonging to the scope of account management by the Magyar Nemzeti Bank (MNB) – in the Real-time Gross Settlement System (VIBER).
In addition to its function as a Clearing House and Central Counterparty, KELER Ltd. carries out Central Securities Depository (CSD) functions as well. Acting as a Central Securities Depository, KELER Ltd. performs the following activities:
- central register of securities;
- allocation of the securities code (ISIN code);
- central securities account management;
- issuance of a certificate on securities offered in Hungary for the purpose of offering abroad,
- issuance of a certificate on securities offered abroad for the purpose of offering in Hungary.
With regard to its systemic importance, it is one of the basic tasks of the MNB se out in the Central Bank Act to monitor (oversee) its activity in order to achieve sound and efficient operation and smooth money circulation.