Securities Market Act: Regulation and Investment

Securities Market Act and the National Securities Market

The Securities Market Law regulates primary and secondary markets of securities. It lays down the principles of its organization and operation, the rules governing the activities of those involved in them, and the monitoring regime.

The issuance of securities should be reported to the National Commission for Securities Market, which is the body designated by the Securities Market Law for that matter.

The National Securities Market

The LMV requires the existence of a public law entity with legal personality and capacity to exercise the functions assigned to it by law and the Ministry of Finance in monitoring and inspection of the securities markets and a few people involved in them.

The CNMV aims to ensure transparency of securities markets, proper price formation, and investor protection.

Investment Service Companies

These are financial institutions whose principal activity is to provide investment services on a commercial basis to third parties. They are:

• Securities companies can operate as either self-employed persons.
• Securities brokers act as agents for others.
• Portfolio-management companies are responsible for managing portfolios on behalf of a number of investors who also advise.

The Guarantee of Investment Funds

Guarantee funds, which are obliged to join all the Spanish companies for investment services. For branches of foreign companies in EU countries, membership is optional.

Investors who do not obtain the refund or reimbursement of the value of the investment company services can ask the fund manager to the company that adheres to the guarantee provided to execute the fund in any of the following circumstances:

• The company was declared bankrupt.
• It has been judicially declared in default.
• The CNMV declares that the company cannot meet its obligations to investors.

Assets without legal personality are represented and managed by one or more management companies with equity interests in companies whose investment services create the background.

Financial Markets

Primary Markets

Primary markets allow the acquisition of passive/active-ups. The form of acquisition of securities in the primary market is determined by the relevant regulations, in the case of public debt issued by the Treasury, or by the prospectus.

The issuance of notes made by credit institutions is carried out through its branch network; however, the issue of debentures, bonds, or debentures of other companies is usually done by utility companies or investment banks. In the capital increase, the subscription rights are traded through the stock, and the acquisition of new shares is done through intermediary companies.

Secondary Markets

Secondary markets allow the sale and purchase of securities already created and found in the possession of a person or entity.