HUNGARY Law and Practice Contributed by: Pál Rahóty, Lakatos, Köves & Partners
ently triggering regulated status if they handle funds or facilitate transactions. As a result, AML and sanctions compliance significantly shapes product design and operations across the fintech sector. 2.16 Reverse Solicitation In principle, Hungarian law (as a result of EU law implementation) recognises reverse solicitation, meaning that a regulated financial service may be provided cross-border into Hungary without triggering local licensing if the Hungarian client approaches the foreign provider on their own exclusive initiative. How - ever, the concept is interpreted narrowly and cannot be used to circumvent domestic regulation. Histori - cally, the local law approach is not solicitation based, and the concept of permitting reverse solicitation was adopted solely because of the force of EU law. In practice, the cases where one can provide servic - es to a Hungarian client on a true reverse-solicitation basis are limited; any active marketing, Hungarian lan - guage targeting, local presence or ongoing systematic business would typically trigger passporting or licens - ing requirements. The MNB applies a substance-over- form approach, and disclaimers alone are insufficient if the provider is effectively targeting the Hungarian market. 3. Robo-Advisers 3.1 Requirement for Different Business Models While robo-advisers do exist for Hungarian inves - tors, the market is still developing rather than being dominated by large local players. Several global and European digital wealth platforms (eg, Revolut’s Robo-Advisor, available to users in Hungary) offer automated portfolio services through their apps, let - ting clients build and manage portfolios based on algorithms. Market reports also identify Hungary as a growing market for automated investment solutions, with increased interest in robo-advisory adoption among investors and expanding offerings over time. In Hungary (as across the EU), different asset classes used in robo-advisory models can trigger different regulatory classifications and therefore different busi -
ness models, depending on whether the assets fall inside or outside financial services regulation. The key distinction is whether the asset qualifies as a financial instrument (MiFID), a crypto-asset under MiCA or an unregulated asset. Each classification may require a different licence, capital framework, disclosure regime and supervisory relationship with the MNB, and robo- advisers must structure their business model accord - ingly. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers In Hungary, legacy banks and investment firms typi - cally implement robo-adviser solutions through hybrid models, combining automated risk profiling, model portfolios and algorithmic rebalancing with human oversight to meet MiFID II suitability requirements. Rather than launching standalone robo entities, they usually integrate white-label or in-house robo tech - nology into existing online banking platforms under their current licences. Most banks integrate auto - mated portfolio allocation tools, model portfolios and digital risk-profiling questionnaires into their existing private banking or retail investment channels. The robo component typically handles risk assessment, asset allocation and rebalancing logic, while a human adviser remains available for validation, complex cases or regulatory suitability confirmation – helping institutions remain aligned with MiFID II suitability and governance requirements. The focus is on digitalis - ing advisory services, lowering costs and minimum investment thresholds, while retaining traditional com - pliance and supervisory structures. 3.3 Issues Relating to Best Execution of Customer Trades In Hungary, robo-advisers that qualify as investment firms under MiFID II are subject to the same best execution obligations as traditional portfolio manag - ers and brokers, meaning they must take all sufficient steps to obtain the best possible result for clients con - sidering price, costs, speed, the likelihood of execu - tion and settlement, size, the nature of the order and the avoidance of conflicts of interest. Hungarian- regulated firms must have a documented execution policy, disclose it clearly to clients, monitor execution quality and periodically review whether their routing arrangements achieve best execution in practice. The
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