2. Budapest Stock Exchange 1 Reinventing capital markets in Hungary The strategy of the Budapest Stock Exchange International roadshow, June 17, 2002 György Jaksity Member of the Board of the BSE Ltd.

3. Budapest Stock Exchange 2 Key points The growth and development of the Hungarian capital market has reversed in the last 2-4 years The BSE has adapted to the new situation but was unsuccessful in govt. lobby There is an opportunity that the new government and financial intermediaries work together to develop capital markets in Hungary The new Board aims to increase domestic capital market investments, new listings and integrate the BSE with European stock exchanges

4. Budapest Stock Exchange 3 Why has the growth of BSE stopped? Overly biased development of the banking sector at the expense of capital markets and long term savings in the last ten years Former government’s unfriendly attitude to markets and issuers, halting of pension reform Slow and inappropriate enaction of modern financial regulation and supervision Continuous financial market crises (Far East, Russia, Brazil, Argentina, Nasdaq etc.)

5. Budapest Stock Exchange 4 Capitalisation and turnover of BSE

6. Budapest Stock Exchange 5 Performance of BUX and MSCI emerging market indices

7. Budapest Stock Exchange 6 The BSE’s reaction Reshuffling of management Cost cutting and rationalisation stabilised the financial situation Generating more revenues from information vending, transaction and issuers’ fees did not compensate for a 60% fall in trading in 2001 Easier facilitation of listing and marketing, still no new listings New products resulted in marginal activity Continuous lobby and support of the legislative process International co-operation and preliminary talks about the European integration progressing well

8. Budapest Stock Exchange 7 The tasks of the new Board The BSE was converted into a limited liability company and a new Board was elected in April 2002 Campaign aimed at domestic investors to enhance long term savings and investing in capital market instruments Co-operate with new government in helping capital markets develop further in Hungary and continue support to improving financial regulation Strengthen the integrity of the BSE and KELER Integrate the BSE (co-ordinated with KELER) into the framework of European stock markets Continue with active marketing and investor relations on an international level together with all market participants (eg road- shows)

9. Budapest Stock Exchange 8 Hungarian savings structure Source: NBH statistics

10. Budapest Stock Exchange 9 Domestic campaign and marketing First of all unite the efforts of ALL financial intermediaries to achieve a common goal Increase people’s awareness for self care and need to save for long term, and invest in private plans Convince savers about the need for higher risk and higher real return instruments such as equities and mutual funds Inform households about how financial institutions can help them optimise on financial planning Promote long term saving and investment instruments and services

11. Budapest Stock Exchange 10 Working with the new government Continuing support to the development of the Hungarian financial regulation Help the new government enact steps to improve  The attractiveness of capital markets for investors and issuers  Motivation of local institutions to be more active in the equity market  Taxation for capital market participants  The profile and efficiency of the Hungarian financial industry and markets  The international image of the Hungarian economy and markets

12. Budapest Stock Exchange 11 Increase integrity with KELER The Hungarian market has a modern trading, settlement and clearing system which operates with a clean history There are opportunities for joining forces in technology, administration, joint product development and seeking of synergies European integration requires harmonised strategies, development and operation The shareholder structure of both firms may change in the future, but should support the above goals

13. Budapest Stock Exchange 12 International and EU integration Our aim is to increase both inward and outward business through the BSE, and improve services provided to our clients The BSE has actively sought strengthening relations with stock exchanges in the region and Europe. We have investigated ways to co-operate with alternative markets and technological platforms We have held discussions with representatives of most European exchanges and alliances We are looking at all alternatives jointly with KELER We can conclude our first agreement within a year

14. Budapest Stock Exchange 13 The network of European markets London NASDAQ NOREX Stokcholm, Koppen- hagen, Oslo, Izland Amsterdam Brussels Paris Frankfurt Helsinki Baltics Ireland EuroNext Portugal Italy Vienna NEWEX Warsaw Budapest Prague Ljubljana Bratislava Madrid XETRA Virt-X Tradepoint SWX New York, Toronto, Mexico, Tokyo, Australia, Hong Kong EASDAQ EUREX DB, HEX, SWX GLOBEX: MATIF, CME, Montreal GEMGEM ? ? iX Neuer Markt Jiway Luxemburg ? LIFFE