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Spanish stock exchange and its structure

Spanish stock exchange and its structure exchange and its structure. As we have seen, investors are capital providers who come to the stock exchange because they want to profit from their savings.

In order to access the stock market, an investor must do so directly through an intermediary: securities and exchange companies (SVBs), securities and exchange agencies (AVBs) or other financial institutions (banks and savings banks).

The investor must open a securities account and sign a contract with one of these intermediaries, after which he will be able to carry out his purchase and sale transactions.

In Spain, securities and exchange agencies (SECs or brokers) and securities and exchange companies (SECs or dealers) have replaced the Company’s personal figure as a form of ownership in the brokerage monopoly that they held prior to 1989. The main difference between an ABI and an SBB is that stockbrokers can only work on behalf of others or third parties in exchange for commissions, while companies, in addition to working on behalf of others, can work on their own account and make a profit, assuming the risk of losses. PSBs may also insure loans for the purchase and sale of securities and the issuance of securities, while agencies may not engage in such activities.

One of the supervisory bodies is the National Commission for Combating Trafficking in Human Beings (NCCB). Its main functions are as follows:

  1. Managing the stock market system
  2. Authorize the admission of the security to trading
  3. Offer permits to companies and agencies in the securities and exchanges sector.
  4. Monitoring and surveillance of markets and institutions that intervene in them.
  5. To inspect markets and apply sanctions when deemed appropriate
  6. (Ensuring transparency and investor protection.

Organizational structure of the Spanish Stock Exchange

 Members of the Board of Directors of NCNMD are mainly appointed by the Ministry of Economy. Thus, NCNOSH is dependent on the Government. The CNMV Board of Directors consults with the so-called Advisory Committee, which includes members of stock exchanges, investors, issuers and autonomous communities that have a stock exchange.

Members of each stock exchange (which may be the Stock Exchange and securities companies, Stock Exchange and securities agencies, as well as credit organizations) are shareholders of the Governing Body of the respective stock exchange, which has the legal status of an open joint-stock company. The Rector of Sociedad is responsible for the organization, management and internal operations of each of the four Spanish stock exchanges. Since 2000, members and shareholders of stock exchanges, banks and savings banks can also be members and shareholders of stock exchanges, although this resource is rarely used.

The Exchange is headed by the Board of Directors of the Company Rector Bolsa de la Valores (the Exchange Governing Body), which performs the following functions:

  • Organize trading sessions – Publish prices
  • Organization of liquidation of the stock exchange
  • Admit securities to trading in cooperation with CNMV

 Securities Market Law

There are four Bolsas in Spain. The first of them was founded in 1831 in Madrid, and later in Bilbao, Barcelona and Valencia. In the history and activities of stock exchanges of great importance is the event, which is the edition of the Securities Market Act (LMV) of July 1988 and its gradual entry into force during 1989. Currently, in June 2007, there is a preliminary bill to amend Law 24/1988, which aims to regulate the Spanish trading system and the provision of investment services in Spain, as well as its supervisory regime. This law has created the current “stock market scenario”. Among the most important changes made in 1988 are the following

The emergence of new financial intermediaries

 The law introduced important changes into its legal form, replacing the exchange agents of the current Stock Exchange and securities companies (SEC) and Stock Exchange and securities agencies (SEC) with the only organizations authorized to carry out brokerage activities directly at the Stock Exchange from 1989 to 2000. These companies must be public companies and the minimum share capital will be €2 million for the SBB and €300,000 for the ABB. In general, they differ in that companies trading in securities and stock exchanges can trade on their own behalf and on behalf of third parties, while securities and exchange agencies can trade only on behalf of third parties. Since 2000, banks and savings banks have been members of the Exchange and act as financial intermediaries in the markets. In this sense Bankpyme and Banco de Finanzas e Inversiones (Fibanc) joined Barcelona Stock Exchange as its members, and Ibercaja and Banco BBVA – as members of Madrid Stock Exchange.

Interrelation of the system of four Spanish stock exchanges

Almost simultaneously with the publication of the LMV, a gradual process of replacement of stock trading in corrosive conditions with trading through the electronic system has begun. With the advent of SIBE (via CATS, Computer Assisted Trading System), all orders placed from the terminal of any intermediary (a member of any stock exchange) are transferred to a central computer. There they are ordered according to their price and time of introduction and as soon as a counterparty appears, the order is executed. Despite the fact that most of the trading is carried out by this system (about 98%), the traditional corrosion system is still preserved, although in a gradual decrease in the volume of trade.

Before the advent of the electronic trading system, also known as the Continuous Market, four Spanish stock exchanges had different companies listed and more than one had separate companies listed.

Permanent market

With trading hours open from 9.00 to 17.35, without breaks. The final auction is held from 17 hours. 30 m to 17 hrs. 35 m to determine the closing price. And from 8.30 to 9.00 a.m. the market opening is held, on which the opening price for the day is determined.

Free commissions on contracts

Any transaction carried out on the Spanish market may be subject to three types of taxation: stock exchange commissions, SCLV (Serviceicio de Compensación y Liquidación de Valores), currently Iberclear, and brokerage commissions Sociedad or Agencia de Valores y Bolsa (and, where applicable, bank or savings bank). Starting from LMV, brokerage commissions are free and contractual.

Access to the stock market

But can you buy and sell shares of any company? No, only shares of registered companies. If a company has decided to go public, it must go through the entire admission process, which is in practice much easier than it is often thought. However, the relevance of the decision to list on the Stock Exchange implies professional training and monitoring through the services offered by companies and exchange agencies.

The requirements for a company to list on a stock exchange relate to three main aspects: a minimum share capital of €1.202 million (200 million pesetas), a profit margin over a predetermined period (although this criterion has been changed for a new market company) and a number of 100 shareholders, not including shares equal to or greater than 25% of capital.

Once the requirements are met, it will be necessary to decide what the placement process will be. The most common systems are: An IPO (public offering) in which the company’s old shares are placed and an IPO (public offering of a subscription) in which the new shares are issued for sale.

Once admitted to trading on the formal market, the security should have a certain minimum trading frequency, expressed as a percentage of the number of trading sessions each half year, and a minimum trading volume, expressed as a percentage of the relative nominal trading volume of a similar set of securities with a simple listing.

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