Spain-Stock Market Exchanges

Spain's four stock market exchanges, located in Madrid, Barcelona, Bilbao, and Valencia, were also undergoing accelerated modernization in the late 1980s. Nevertheless, the country's nearly 200 powerful exchange and stock market agents (agentes de cambio y bolsa) exercised a monopoly on all equity transactions, as they had for over a century and a half. These agents, who were required to take civil service examinations and to perform bureaucratic functions, were government employees for all practical purposes, but many of them earned as much as US$1 million a year.

Under the Securities and Market Reform Act of 1988 (Ley de Reforma de Mercado de Valores), stock market operators were to be attached to brokerage houses, several dozen of which were established in 1987 and 1988. These houses either dealt in shares, and were known as sociedades de valores (SVs), or they functioned as brokers to third parties and were called agencias de valores (AVs). Other planned changes in the stock market system included eliminating fixed commissions, establishing a strict regulatory body, and creating continuous trading and electronic bookkeeping systems.

Spanish stock markets had traditionally been notoriously undercapitalized, and both domestic banks and foreign interests had been excluded from their operations. The government's intention was to make Spain's stock markets more competitive and to allow them a greater role in the country's capital market. Most major transactions had previously taken place outside the stock exchange, but now Spanish banks were to be granted entry to the domestic securities market, and foreigners were to be allowed access to it on equal terms by 1992. In the interim, the country's stock markets were being given several years of breathing space in order to prepare for this challenge.

Data as of December 1988