Government submits amended bill to replace Quaestor law

Budapest, December 9 (MTI) – The government on Wednesday submitted a new bill on the compensation of investors who suffered losses caused by bond issues where the distributor belonged to the same group as the issuer.

The so-called Quaestor law, which was to regulate compensation for a special group of investors – those who suffered losses due to the failure of the Quaestor brokerage early in 2015 – will lose effect with the new law.

The bill was submitted after Hungary’s Constitutional Court on November 17 invalidated parts of the Quaestor law, passed earlier this year. That law effectively raised the compensation threshold for investors of failed brokerage Quaestor to about 100,000 euros from the existing compensation threshold of 20,000 euros covered by the Investor Protection Fund (Beva), and left Beva members to cover the difference.

The Constitutional Court said that the manner in which the law involved Beva members in the compensation payment was unconstitutional, as were the parts of the law which outlined eligibility for the compensation because they were discriminatory. It said, however, that lawmakers could correct these deficiencies.

The new bill says that Beva compensation in cases when the liquidation of financial or capital market businesses is ordered by court will be up to 30 million forints, with previous yields and some costs deducted, and 11 percent borne by the damaged investor over damages of 3 million forints.

Compensation to the investors will be financed from a central bank bridging loan or bond, which will be paid off from the payments of Beva members. The new bill specifies that the first payment by Beva members will take place in March, 2017 and from then on annually. The bill also puts a combined annual limit of 7 billion forints on the payments by Beva members.

The bill will require a four-fifth support to clear parliament so that it could be passed in an accelerated procedure as soon as next Tuesday. Otherwise parliamentary discussion could start only in February, justice ministry state secretary Pal Volner told the press on Wednesday.

Photo: MTI

Source: http://mtva.hu/hu/hungary-matters