Stock Market, Securities, Bonds & Investment Funds

Item 9: Stock Market

Stock market: The stock market is the market where savers exchange their resources with investors' money in return for financial assets. It facilitates the transfer of funds from those who have surplus capital to those who need financing.

Financing of the Company

Financing of the company: For contributions to the company's capital there are different methods, including equity contributions, various types of loans and other forms of borrowing.

Funding from the Public Sector

Funding from the public sector is carried out through traditional means such as taxes and through a set of financial instruments commonly referred to as public debt.

Financial Assets (Securities)

Financial assets (or securities) consist of instruments that represent either outstanding debt (bonds) or participation in share capital (shares). These securities are generally classified into two main types:

• Fixed-income securities: Instruments that provide predetermined or fixed yields.
• Variable-income securities: Instruments whose income is not known in advance and can vary over time.

Bonds and Shares

The bondholder is the person who acquires the bond title and effectively lends money to the issuing company. Shares are securities representing an ownership interest; the shareholder is the holder of one or more shares and therefore a part-owner of the company.

Broker-Dealers and Securities Firms

Broker-dealers and securities firms are dealers authorized by law to operate in the securities market. They differ in that a broker typically trades only on behalf of others, while a securities firm (or dealer) can trade both on its own account and on behalf of clients.

Investment Funds

Investment funds: A fund's assets are constituted by the contributions made by many investors. Investors' ownership rights are represented by participation certificates. Funds are administered by a management company, which is responsible for investment decisions and day-to-day management, and by a depository institution, which holds custody of the securities and performs oversight to protect investors.

National Securities Market Commission (CNMV)

The National Securities Market Commission (CNMV) is the supervisory body of the Spanish financial system. Its primary objective is to ensure the proper functioning and transparency of the securities markets.

Stock Market Operation

The stock market is the official venue where transactions are carried out for the sale and purchase of marketable financial assets, according to criteria set by law. Its operation is conducted through two main systems:

• Traditional (auction) market: Transactions are carried out at discrete times according to defined rules (often called call or auction markets).
• Continuous market: Transactions can be executed continuously during trading hours at prevailing market prices.