KIR-THE – HFSA Capital Market Supervision and Market Monitoring System

Receipt of securities and account files
Receipt and processing of capital market transactions
Market monitoring
Acquisition monitoring

The HFSA has developed a complex IT system for the controlling and management of its processes. In relation to this system, OPEN Ltd. was commissioned to develop the Capital Market Supervision and Market Monitoring system (KIR-TNHE), in a way that would ensure compatibility with the previous system. The KIR-TNHE is one of a number of subsystems that connects dynamically to the HSFA’s central information system (known as ‘KIR’).

KIR-TNHE was formulated in the .NET development environment on an objective-oriented (OO) basis, making use of the following .NET services:

• .NET Framework
• Programming model (ASP.NET)
• .NET Windows Forms
• Database access: ADO.NET

The KIR-TNHE system provides a comprehensive range of services for the recording and controlling of securities market transactions. The system also performs recording and checking functions related to share acquisitions reported to the Hungarian Financial Supervisory Authority.

The main features and functions of the system are as follows:

• Receipt of account data and the forwarding of the data to the Reporting module
• Receipt, processing and controlling of capital market transactions, alerting
• Market monitoring
• Receipt, recording and processing of share-acquisition reports, the generation of alerts regarding extraordinary events

Modules and business functions

The Capital Market Supervision and Market Monitoring system fulfils its functions related to securities settlement controlling and the recording and controlling of acquisitions using the following modules:

• Receipt of Securities and Account Data
• Receipt and Processing of Capital Market Transactions
• Market Monitoring
• Acquisition Monitoring

The modules can be implemented in a stand-alone manner, or in combination with each other.

The Receipt of Securities and Account Data module loads the securities standing data and the securities and cash account balances, received at the HFSA for the purpose of reporting, into the HFSA’s central system. It automatically forwards the loaded data to the central system’s KIR-ASZ (data-provider) subsystem for analysis.

Functions of the Receipt of Securities and Account Data module:

• Receipt of data sent for reporting purposes, which are as follows:
• Securities standing data
• Securities account files
• Cash account files
• Validation of received securities data
• Forwarding of received securities standing data, and of securities and cash balances, to the HFSA’s data reporting subsystem (KIR-ASZ).

The Receipt and Processing of Capital Market Transactions module loads securities trading files, received at the HFSA for the purpose of data reporting, into the HFSA’s central system. The following trading-data files are received:

• BSE trading
• Gross settlement
• BSE futures trading
• BCE futures trading

Once the files have been imported, the supervisors can run queries in relation to given transactions, or the system can be triggered, by user-defined events, to run queries and inform the relevant supervisors of the results (alerting).

The Market Monitoring, module enables the HFSA to run individual market queries from capital market trading data, in accordance with the requirements of the Hungarian markets and the supervisory authority.

The Market Monitoring system performs the following services:

• Queries related to capital market transactions
• Definition of extraordinary events related to the queries (per supervisor if necessary)
• Generation of automatic alerts triggered by such events

In other words, the system is capable of running automatic queries, triggered by the occurrence of market monitoring events defined by users, and inform (alert) the supervisor concerned of the result.

Acquisitions Monitoring module

With the passing of Act L of 2001, the provisions pertaining to corporate acquisitions under Act CXI of 1996 on Securities Offering, Investment Services and the Stock Exchange changed. Under the new regulations, any acquisition of a controlling interest must be reported to the HFSA, using a form specially issued for this purpose.

The Acquisitions Monitoring module enables the recording, querying and monitoring of acquisition reports received by the HFSA, and generates the related alerts.

The KIR-TNHE Acquisitions Monitoring module covers the following processes:

• Acquisitions:
• Recording of reported increases/decreases in controlling interests
• Processing
• Alerting in the event of detected breaches of the regulations
• Changes in treasury stock:
• Recording and validation of reported changes in the treasury-stock portfolio
• Processing
• Alerting in the event of detected breaches of the regulations

Connections of the KIR-TNHE system to other KIR subsystems

The KIR-TNHE subsystem is closely integrated with the following subsystems:

• KIR alerting subsystem
• KIR authorisations subsystem
• KIR–KTA subsystem
• KIR–ASZ subsystem

Connections of the KIR-TNHE subsystem to other systems external to the KIR

KIR-TNHE subsystem is connected to the following systems outside the KIR:

• MS SPS subsystem (via its Microsoft filing system)

The KIR-TNHE Capital Market Supervision and Market Monitoring system is a modular application with a three-layer architecture, and with a user friendly graphical interface, which can be flexibly developed to suit a wide range of user requirements.

Hungarian Financial Supervisory Authority (HFSA)