Madrid Stock Exchange – What is it, definition and concept | 2022

We are facing a market for the purchase and sale of fixed and variable income capital. In addition, it is carried out in a structured and orderly manner. Therefore, protocols are followed for operations, which, in turn, are regulated by the National Securities Market Commission (CNMV).

In this market we can buy or sell shares of companies such as Movistar or Repsol, which would be equities. We can also operate with obligations, bonds and Treasury bills (public) or obligations of companies (private), which would be fixed income.

History of the Madrid Stock Exchange

Let’s see some relevant data about the history of the Madrid Stock Exchange. We will show them in chronological order.

  • We have a clear precedent in the contract markets. They originated in Italy and brought together farmers and ranchers for the sale and purchase of their products.
  • José Bonaparte, Napoleon’s brother and named King of Spain by Napoleon, created the first stock exchange in Madrid in 1809.
  • In 1831, in Plazuela del Ángel, the Madrid Stock Exchange held its first session. Financial entities, railways and steel companies were listed on it. It was only open for three hours and had five agents.
  • In 1854 the first Official Procurement Bulletin was published, which reported the different official prices. A short time later, what was the official currency of Spain before the euro, the peseta, appeared.
  • At the beginning of the 20th century, after a deep crisis, this stock market grew again due to the repatriation of capital from Cuba and the Philippines.
  • With the Franco dictatorship, from 1936, there are two stages. One in the period of the civil war, in which the activity was paralyzed and the other in the post-war period, in which it revived again.
  • The 1980s and 1990s were a time of growth that was only slowed by the Crash of 1987. This was due to a brief but intense crash in global stock markets that began in Hong Kong and spread to the rest of the world.
  • The 21st century started badly for this market, due to the crisis of telecommunications companies in 2000, which affected technology-based companies.
  • In 2002, it joined the Bolsas y Mercados Españoles (BME) group, and in 2007 the European Financial Instruments Directive (MiFID) came into force.
  • After the crisis of 2008, in 2014, the Madrid Stock Exchange managed to reach its historical maximum, coinciding with the economic recovery of Spain.
  • In 2019 the Swiss group SIX buys BME, which is no longer listed on this market.
  • Finally, regarding the venues, from 1831 to 1850 it had six different ones. For its part, on May 7, 1893, the current headquarters were inaugurated in the Palacio de la Bolsa in Madrid.
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The Madrid Stock Exchange, operation and indices

This exchange is open from 8:30 a.m. to 5:35 p.m. Monday through Friday. In addition, its operation is reflected in circulars and operating instructions regulated by the Governing Society of the Stock Exchange.

The main difference between the two is that the circulars are orders of a general nature and the operating instructions are specific. Both are approved by the CEO and are communicated to the interested agents.

In conclusion, there are three major indices. The IGBM and the ITBM are similar, they represent 113 traded securities and the difference between the two is that the general (IGBM) represents returns on the prices of the securities and the total (ITGM) also includes reinvested dividends.

Finally, the IBEX35 is perhaps one of the best known nationally and internationally. As its name indicates, it is made up of the 35 most liquid companies in the country. On the other hand, it is a weighted index of prices, so that each company has a different weight in it.

A day on the Madrid Stock Exchange and the IBEX 35

Let’s see, finally, an example of the IBEX 35 in a period of time from 01/24/2022 to 02/21/2022. In the column, to the right of the date, is the last value of the index, which is perhaps the most relevant. Then we have previous, maximum, minimum and average (average).

Madrid Stock Exchange 1 1

We can see, in the graph to the right, that the curve had a maximum on February 10 and a minimum, within that period, on February 14, 2022. The IBEX 35 is one of the best known and most used in the Madrid Stock Exchange and it includes the large Spanish companies.

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