History

The Budapest Commodity Exchange, a non-profit, self-governing organization, was established on August 15, 1989 as the Produce Exchange Co. and began trading on October 25, 1989, offering futures contracts on the two leading Hungarian crops--corn and feed wheat.
In 1990, the company changed its name to the present one, and in 1992, the members of the Exchange bought out the original founders (banks and large trading companies). Present ownership is made up of 94 legal entities including banks, foreign trade companies, brokers, grain traders and meat processors.
The transformation of the BCE was executed based on the Act XXXIX of 1994 on November 25, 1994.
The highest decision-making body of the Exchange is the General Meeting. The executing and operating body of the Exchange is the Exchange Secretariat. There are three sections operating currently on the Exchange; the grains, the live stock and the financials.
The open-outcry method of trading is employed in the Grain and Livestock Section. Trading in the Financial Section is fully electronic from July, 2000.
After-hours electronic trading is available in the Grain Section from November, 2000.

Derivatives contracts

The BCE currently operates three sections--grains, live stock and financials. Futures contracts include:

Options contracts on futures include:

Contracts specifications

Membership Requirements

There are currently 94 members. Trading privileges on the BCE floor require an exchange seat in each market for which privileges are desired: grains, livestock, and currencies. Clearing privileges require a separate membership. The BCE Rules provide that any company, Hungarian or foreign, is eligible for membership after demonstrating certain financial and other criteria. Membership applications are evaluated by the Board of the Exchange.

Clearing

The clearing house provides guarantee for performance of each transaction executed on the BCE floor by stepping in between the trading parties as a third contracting party, assuming responsibility. Clearing members are required to deposit financial collateral with the clearing house before they start any trading or clearing activity. Each traded contract must be secured by an initial margin, and the variation margin is called daily on losing positions. In the event of physical delivery through the Exchange, all payments must be deposited with the clearing house in advance to assure accurate and timely compensation of sellers. In July, 1994 the BCE clearing division joined with that of the Budapest Stock Exchange to form a joint clearing operation known as Central Clearing House and Depository Ltd. (KELER Ltd.). The third partner is the National Bank of Hungary. A new form of membership became available to BCE members, a clearing membership in KELER, which is required to clear all ensuing trades.

Prospective developments

The components of the strategy, accepted by the general meeting, concentrate on product developments, opening of new markets (e. g.: energy) and a complete switch over to electronic trade. The strategy comprises a closer co-operation with the BSE. The combination of powers could be advantageous for both institutions for the reservation of a successful presence on the ever globalising market. Parallel to this, the BCE plans the forming of a strategic alliance with the world leading commodity exchanges, and in the tighter, Middle Eastern European region, concentrating on a few competitive products.

Regulator