EFTA01379406.pdf

22 December 2017 EM Currency Handbook 2018: Still Fuel in the Tank Regulatory framework and approach ▪ The National Bank of Hungary regulates exchange rate policy. and is also responsible for implementing monetary policy (http://www.mnb.hu). • The principal policy rate is the rate on the three-month NBH deposit (base rate). The NBH deposit is available through a fixed rate tender for the counterparties, with the rate set as the policy rate. From the tender held on 26 October 2016, access to the three-month deposit facility is subject to quantitative restriction, currently fixed at HUF75bn as of end-2017. NBH maintains an asymmetric overnight interest rate corridor. Rate on O/N deposits equals to the base rate minus 105bps, while on O/N collateralized loans it is equal to the base rate. • The Hungarian forint is a fully deliverable and convertible currency. HUF products FX spot Avg. ticket size: EUR 10mn Bid/ask spread: HUF 0.2 Avg. daily volume: EUR 1bn Ref. source: ECB fixing <ECB37> FX forward:swap Avg. ticket size: USD 20mn (FX forwards); USD 75mn (FX swaps) Liquid tenors: <1Y Bid/ask spread: HUF 0.4-1.4 Avg. daily volume: USD 100-200mn (FX forwards), USD 2-3bn (FX swaps) F>: options Avg. ticket size: EUR 20mn Liquid tenors: <1Y Bid/ask spread: 0.5 vols IRS r• FRA Avg. ticket size: USD 10k DV01 Liquid tenors: IRS 1Y-10Y and FRAs out to 9X12 Bid/ask spread: 2-4bp Daily volume: FRA S50k dv01. IRS S150k dv01 Fixing: 3M BUBOR for 1Y IRS; 6M BUBOR for IRS 2Y+ Ref. source: Reuters page <BUBOR=> Government 1.hills and bonds Regulatory: T-bills and Bonds trade OTC and on Budapest Stock Exchange (BSE). Bonds are dematerialised bearer securities. Clearing and settlement of trades occur on the Central Clearing House and Depository (KELER). There is no withholding tax on interest paid on Hungarian securities owned by a legal entity. Individuals are charged withholding tax at 20% but this can be reduced or eliminated through double taxation treaties. There are no restrictions on non-resident ownership of Hungarian government bonds and T-bills. Liquid tenors: 3Y-15Y Avg. ticket size: USD 3mn Bid/ask spread: 4bps Deutsche Bank Securities Inc. Page 63 CONFIDENTIAL - PURSUANT TO FED. R. CRI M. P. 6(e) DB-SDNY-0076866 CONFIDENTIAL SDNY_GM_00223050 EFTA01379406