Interview with László Havas – CEO of KELER Central Securities Depository

Changes in international capital markets are bringing new directions and challenges for CSD participants as well. What does this mean for a depository, and what role does it play in these processes? László Havas, the new CEO of KELER Ltd., explained in an interview with GPS Press how international capital market trends, the transition to T+1, and EU harmonization efforts impact KELER's operations and future.

My career has been tied to the banking sector for over twenty years, mostly in leadership roles in capital markets. KELER has played a significant role in my professional life from the beginning, as we worked closely together for many years.

After that, I spent a long period abroad, which opened significant professional and personal horizons for me. I worked for three years in London as a member of the EBRD Board and then served as a high-ranking diplomat representing Hungary's financial diplomacy in Beijing for four years, participating in the work of the AIIB and MCDF boards. As another milestone, I represented Hungary as an ambassador at our Permanent Representation to the OECD and UNESCO in Paris. These positions came with great responsibility beyond professional challenges: I represented the country's official stance in international decision-making, negotiations, and forums. 

I gladly accepted the invitation to lead KELER. Depositories face significant challenges in the coming period: ideas related to international harmonization, and the capital market union may present tasks that require KELER's repositioning in both domestic and international markets. I believe that my domestic and international professional experiences have helped me see economic and business processes at a systemic level and understand the relationships between corporate culture, strategy, and leadership from a new perspective, laying the foundation for the approach I now represent as CEO of KELER. 

We see that as a depository, we have and can influence how quickly Hungary can catch up with those countries that the world considers part of the most developed capital markets. KELER is doing everything within its capabilities to help increase competitiveness in domestic European markets. 

Accordingly, it can be stated that in recent years, KELER's settlement system has been prepared and already meets the challenges of the present, as some components of the system communicate with each other based on the ISO 20022 message standard. This innovation allows the use of these message standards not only through KELER's own client communication system but also accessible to our clients via the SWIFT network. 

To comply with the SRD II regulation, KELER has developed a completely new IT solution that communicates through ISO 20022 standard messages and provides information related to certain corporate events to the market. Additionally, KELER as a CSD with banking license participates in international and domestic projects aimed at renewing message communication for financial operations, which focus on the broader adoption of ISO 20022 message standards and ultimately replacing the ISO 15022 standards, which are increasingly misaligned with today’s challenges. 

Considering domestic and international client needs, KELER intends to maintain the availability of both standards in SWIFT-based message communication related to securities settlement for the time being. However, we believe it is important to note—taking trends and tendencies into account—that the transition to the ISO 20022 standard is unstoppable and will soon have no alternative. Regarding EU harmonization, we would like to reiterate that KELER supports standardization processes, but we see that the adoption and integration of good practices in less developed capital markets is more challenging. Therefore, we consider it important to strengthen regulatory involvement to achieve common goals, exemplified by the aforementioned SRD II legislation and legislative activities related to T+1 settlement.

The financial markets of the European Union are poised for significant transformation due to the transition of the current T+2 settlement cycle to T+1 by October 2027. This decision is a strategic response to global market trends aimed at increasing the efficiency and competitiveness of European markets while reducing risks.

Since the announcement of the transition date last November, the KELER Group has been closely monitoring events and participating in international professional work. Together with the MNB (Central Bank of Hungary), we have determined that KELER will take a leading role in coordinating the domestic capital market's transition, and this year, a broad market consultation on the topic will begin in 2025. In parallel, continuous consultations are taking place among the infrastructures supporting the domestic capital market (MNB, BSE, KELER, KELER CCP) to review and optimize processes following trading affected by the T+1 cycle. We continuously inform our clients about the results of the work being done both domestically and internationally through our communication channels.

It is important to highlight that the transition to T+1 is also a comprehensive, industry-level modernization effort. The key to successful implementation is high-level coordination and cooperation among the involved parties - regulators, supervisory authorities, trading venues, clearinghouses, depositories, and market participants.

The challenge of introducing the shorter cycle typically does not stem from the processes of the depositories or the systems they use. Analyses clearly indicate that the systems responsible for securities settlement are already capable of real-time and even T+0 settlement today, so there is no obstacle to T+1-based operations with the current systems. The real challenge and key to the success of the transition lies in the broader capital market ecosystem. 

In my view, the role of depositories in the transition is primarily to support market readiness, facilitate related coordination, and expedite market participants' post-trade processes. Due to the shorter deadlines, processing, allocation, and sending confirmations and settlement instructions for stock exchange transactions must be completed on the trading day, necessitating the minimization of manual interventions and full automation for capital market participants.

I am proud that KELER has been serving the domestic money and capital market for over 30 years, providing a stable and reliable infrastructure as a solid foundation that can be confidently built upon in the future. The strategy for 2023-2027 focuses on achieving domestic excellence, envisioning KELER as an organization that operates efficiently, at a high level of automation, sustainably, and profitably in the long term.

At the same time, we are already working on preparing for the next strategic cycle. The guidelines effective from 2027 will be developed in cooperation with the MNB Group. The aim of this joint thinking is to create a modern depository that leverages group-level synergies, operates on technological and digital foundations that meet today’s challenges, utilizes the potential of artificial intelligence, and widely serves and supports the Hungarian capital market.

At KELER, the primary goal is to ensure the secure operation of infrastructures, and in this context, we evaluate the introduction of new solutions and technologies while considering cost-effectiveness and market processes. 

Artificial intelligence is primarily available through cloud-based services today, so we are examining its application directions and possibilities within the framework of our strategy in accordance with its principles. As a depository and key financial infrastructure, we currently see the greatest added value of technology in increasing the efficiency of our internal processes. 

However, we are also aware that the rise of AI brings new types of risks. Cybersecurity challenges are intensifying globally, and attacks are appearing in increasingly varied forms. Therefore, as a depository, it is our responsibility to prepare proactively and ensure the protection of our systems—understanding and consciously using AI is essential in this regard. 

In my vision, KELER will operate in the short term as a dynamic, proactive, and value-creating organization that widely serves and supports the domestic capital market, consciously leveraging the technological opportunities of the 21st century. I believe that this not only contributes to the development of the domestic capital market but also actively participates in the international integration of the Hungarian capital market.

I hope that this direction will create a stable foundation for further development, growth, and strengthening client satisfaction and to enhance market efficiency in the long term—after all, this is ultimately what drives all our efforts.