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Financial Dictionary - Madrid Stock Exchange

Madrid Stock Exchange

It is Spain's most important securities market. It is part of Bolsas y Mercados Españoles (BME), and uses the reference of the Madrid Stock Exchange General Index (IGBM), which currently has 113 stocks.

This organisation recognises market regulation as a benchmark and imposes stringent regulations on operators and intermediaries. It also falls under the Markets in Financial Instruments Directive and coexists with other new systems, such as the MTF.

It is located in the Palacio de la Bolsa, in the Plaza de la Lealtad, in a building that serves as the BME headquarters. Although the notion of the stock exchange as we know it dates back to the 16th century in the Netherlands, the roots of the Madrid Stock Exchange may be traced back to 14th century commodities exchanges, which sold grain, wool, and silk in close proximity to the stock market. It has been one of Spain's oldest financial organisations since its founding in 1831, and it has played an important part in the country's development, working as a catalyst for economic growth, channelling savings into investment, and allowing money movement.

It provides a transparent and secure environment for businesses and investors, as well as stringent operating standards and oversight of all operations. It also protects the investor and has complete autonomy in carrying out its functions using a variety of methods and services. It is controlled by a Governing Body and is regulated by a set of rules in the form of circulars (internal Madrid Stock Exchange rules on trading and other functions) and operating instructions (specific rules of order and coordination of departments and market members).

Throughout its history, it has adapted to technological and legal developments, as well as to international market services and instruments.

As a marketplace, first and foremost, it acts as a meeting point for companies and investors: The former obtain financing through the issuance of financial assets, both fixed income and equity (shares, bonds, debentures, and so forth), while individual or institutional investors or savers seek a return on their investments.

Yet the Madrid Stock Exchange is also a secondary market. This means that it enables investors to trade, buy and sell financial assets that have already been issued in the primary market, providing for accurate asset valuation via their price. Its main strength is unquestionably liquidity, as it can quickly convert investors' shares into cash on demand, regardless of investment horizon.

Also, it provides an enquiries and complaints service, yearly reports, and training through various courses and masters in addition to its securities trading role.



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