As one of the most important provisions of the new act securities – excluding government bondssecurities - might only be offered publicly in dematerialized form; securities publicly offered prior to the act entering into effect – being January 1, 2001 – and produced in printed form - with the exceptions stipulated in the act - are to be transformed by the issuer into a dematerialized security by the date of December 31, 2004 the latest.

Simultaneously, stipulations of chapters of the Civil Code on securities were accomplished with regulations relating the type (bearer and registered securities) and rules of transferring securities.

As an important step forward, the Act – based on private offering - aims at distinguishing between types of offering procedures. Accordingly, in a private offering the security is offered through the issuance exclusively for investors identified individually beforehand, on the basis of the previous letter of intent of the investor, including the case, if

a)      the security is offered exclusively for institutional investors;

b)      the joint-stock company transfers equities provides shares to its stock holders free of charge at the expense of assets over and above itsthe equity capital;

c)      the issuer transacts an exchange of securityies transformation, which does not result in the  increase in the issuer’s equity capital of the issuer, provided that the 
        replacement securityies to be transformed will has not been offered publicly either;

d)      the issuer transacts an exchange of securityies transformation, during which the offering of the security takes place by exchanging transferable convertible bonds or 
         by redemption exercising of any other rights ensured by other securities, provided that the replacement security to be transformed will has not been offered publicly 
         either;

e)      security arising from the capital increase will be offered in connection with acquirement of influence any participating interest in a joint-stock company as an equivalent;

f)       security arising from the capital increase will be offered in connection with the merger of companies as an equivalent;

g)      the security will be sold to the employees, former employees or elected officials of the issuer.

For the sake of protection of investors the public offering of privately issued securities for persons not identified individually beforehand is subjected to the regulations of public offerings, and, subsequent to that, the regulations of securities offered publicly are to be employed applied. Consequently, the offering of the transferor when the tarnsferor makes the offer to individual persons, who are recordedgistered  in various lists registers, but who are not in direct personal or business contact with the transferor, isshall be regarded legally as a transfer to persons not identified individually beforehand.

Offering of securities to person not identified individually beforehand is a public offering.

Legislator gave up the former regulation principle permeating characterising the previous Securities Act that subscription is the principal technique of public offering.

Accordingly, parallel with stipulating general rules of offering, the following public offering techniques are set down in the Act:

a)      subscription;

b)      auction;

c)      continuous issue offering;

d)      tap issue (repeated or batch issues).

A special  technique of offering government paper or other debt securities might be the issuance program of issuance in the future, the definition of which is stipulated by the Act as the pool of security issues of one issuer in maximum two consecutive years, the preconditions of which are stipulated by the issuer at launching the program and the individual characteristics of the issue are determined in the course of the particular tranches of issues.

As a consequence of foreign exchange liberalization the protection of domestic investors and the unanimity and the safe operation of the domestic market should be ensured. The precondition of spreading out of hedge transactions is the evolving of a liquid market. This needed an adequate regulation, which ceased previous legal uncertainties in the case of some types of transactions and the introduction of the institution of close-out netting, that closes positions.

According to the abovementioned purpose the definition of security-deposits, including individual and collective deposits, has been regulated in detail, on the basis of principles proven in practice. The rules of immobilized security (the issuer deposits the securities of one serial in printed form individually, or, in one or more, merged denominations at a custodian on behalf of the investors who bought them)  are included in this chapter of the Act. Due to the mandatory dematerialization, however, this procedure widely used in foreign capital markets too, might be used only in a narrow scope in the future.

Detailed rules of lending and borrowing of securities are included in a separate chapter. Subject of a security borrowing deal might only be a security, in the case of which the lender’s right of disposal is not limited. Security lending and borrowing contract might be signed exclusively for a fixed term, not longer than one year. According to the prescription of the Act the lender, or the investment service provider taking part in the deal as a commissioner is obliged to stipulate adequate pledge collateral as an insurance of the realization of the deal and parties have to adjust its market price to the market price of the security lent out. The minimum amount of the pledged assets is stipulated by the Act in connection with the market value of the security lent out: in the case of government paper, debt securities issued with state guarantee or mortgage bonds it is 105 percent, in any other cases 120 percent.

As an important regulation of the protection of investors is that in order to lend out securities deposited by the client, or registered on the securities account on behalf of the client by the investment service provider a separated security lending framework contract signed with the owner of the security, or, the existence of a security lending contract is needed.

Parallel with the entering into effect of the Act on Capital Markets the stipulations regarding bonds and Treasury bills were also made more precise in the Government decrees of 285/2001 (XII.26) and 286/2001 (XII.26).