Stocks in Spanish

An Overview of the Stock Market in Spain

In the conditions of crisis phenomena in the economies of different countries, confidence in the future can be ensured by investing in less profitable but also less "risky" European companies, for example, in Spanish companies offering their shares on the stock exchange. Securities trading, like other types of business, stimulates the progressive development of the country's economy. Read about how the Spanish stock market works in our article.

History of the Stock Market of the Kingdom

In the 13th century, "los juros" – government debt securities were issued. "Juros" were loans in the form of securities issued by the kings of Castile to individuals. In 1246, King Jaime I of Aragon created the House for contract conclusion and trade procurement in Palma de Mallorca. Such trading houses were opened in Zaragoza, Valencia, and Seville during the 13th and 14th centuries. In 1503, the Casa de Contratación de Indias was created, which facilitated trade with Latin American possessions in America.

The Madrid Stock Exchange was established between 1808 and 1831, with its roots dating back to the 14th century. Currently, the stock exchange holds positions among the top 20 global exchanges and has trillion-dollar turnovers.
The Spanish Stock Market

The stock market (la bolsa) or the securities market (el mercado de valores) is a capital market where income is determined by the difference between the purchase and sale of securities. Trading allows capital to be directed from investors to users in the medium and long term.

The Spanish stock market corresponds to the interests of several groups of participants:

  • Companies that place their shares or bonds on the market and, as a result of their acquisition by the population, obtain the necessary financing.
  • Buyers of shares – investors (los ahorristas) who receive profits through dividends or interest from investments in bonds.
  • The state, which attracts funds to finance expenses and finds opportunities to promote new directions and social programs.

Stock Exchanges in Spain

The stock exchanges create conditions for market participants who engage in the buying and selling of securities upon the request of their clients, offering a wide range of investment instruments.

Today, the following Spanish stock exchanges are in operation:

  • Madrid Stock Exchange (Bolsa de Madrid) – the largest stock exchange in Spain.
  • Barcelona Stock Exchange (Borsa de Barcelona) – a regional stock exchange.
  • Bilbao Stock Exchange (Bolsa de Bilbao) – a regional stock exchange.
  • Valencia Stock Exchange (Bolsa de Valencia) – a regional stock exchange.
  • Latibex – a stock market for Latin American securities located in Madrid.

These exchanges are owned by the conglomerate Bolsa y Mercados Españoles.

What is Traded on the Stock Market in Spain?

In accordance with Law 4/2015 on the Securities Market, Articles 2 and 3, trading is allowed for assets of public and private, physical and legal entities, whose issuance, sale, and commercialization occur within the national territory of Spain.

The main types of securities include:

  • Company shares and equivalent securities.
  • Active quotas of savings banks and commission fees for participation in the Spanish Confederation of Savings Banks.
  • Bonds, debentures, and similar securities, convertible bonds, variable income bonds.
  • Fixed-income securities of government and private debts.
  • Participation certificates, bonds, mortgages, loans.
  • Treasury bills, deposit certificates.
  • Participants in trading on the Spanish stock exchange

The participants in stock exchange operations include:

  • Capital seekers (companies, government or private organizations, and other entities).
  • Capital providers (depositors, investors).
  • Intermediaries (brokers and brokerage firms) who carry out their work in exchange for a commission.

The National Securities Market Commission (Comisión Nacional del Mercado de Valores – CNMV) and the Securities Compensation and Liquidation Service (Servicio de Compensación y Liquidación de Valores) are the regulatory bodies of the Spanish stock market.

Requirements for Participants

Participants in trading (issuers, intermediaries, investors, and other economic agents) register in the National Securities Register (Registro Nacional de Valores) to be able to track all stages of trading both domestically and internationally.

Companies listed on the stock exchange publish their financial reports as they determine their financial position indicators.
Requirements for Firms Listing Shares on the Stock Market

The minimum capital of a company registered on the stock exchange is €1,200,000, distributed among shareholders, none of whom should own more than 25% of the share capital.

Registration with the National Securities Market Commission and compliance with the issuer's legal regime.

Payment of fees to the National Securities Market Commission and the Securities Compensation and Liquidation Service, as well as other necessary expenses and charges.

Trading Process

Currently, all trading operations are automated and conducted through the Electronic Communication Network (ECN). The system operates on a program where buyers and sellers are virtually connected. A "retail trader" does not have direct access to the market; they need a platform (direct or indirect) to conduct their stock transactions. Brokers provide this platform and charge a commission for the executed transaction, which is why they are called "market makers." They also receive payment for the use of this platform.

The advantage of investing in stocks is that it does not require a large amount of money, and credit can be obtained for purchasing shares. Sometimes, as little as €100 is enough to start engaging in this interesting activity.

Legislation

The Securities Market Law, approved by Royal Legislative Decree 4/2015 on October 23 - Real Decreto Legislativo 4/2015, de 23 de octubre, por el que se aprueba el texto refundido de la Ley del Mercado de Valores.

Commission Regulation (EC) No. 1287/2006 of August 10, 2006, on obligations of market participants, transaction information, market transparency, admission of financial instruments to trading, and defined terms for the purposes of this Directive – Reglamento (CE) No. 1287/2006 de la Comisión de 10 de agosto de 2006.

Directive 2004/39/EC of the European Parliament and of the Council of April 21, 2004, on markets in financial instruments – Directiva 2004/39/CE del Parlamento Europeo y del Consejo.

Emily Anderson

Author

calendar icon 20.02.2024

Expert on stock and international commodity markets.

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