Regulation of the Stock Market in Spain

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STOCK MARKET REGULATION IN SPAIN

- Sushreet Pattanayak

Table of Contents
Introduction3
Function of the CNMV6
CNMV Structure7
Council of the CNMV8
International Activities of CNMV9
Conclusion11

Introduction

The Comisión Nacional del Mercado de Valores (CNMV) is the agency in charge of supervising and inspecting the Spanish Stock Markets and the activities of all the participants in those markets. It was created by the Securities Market Law, which instituted in-depth reforms of this segment of the Spanish financial system. Law 37/1998 updated the aforementioned Law and established a regulatory framework that is fully in line with the requirements of the European Union and favour the development of European Stock Markets.[1]

The purpose of the CNMV is to ensure the transparency of the Spanish market and the correct formation of prices in them, and to protect investors. The CNMV promotes the disclosure of any information required to achieve these ends, by any means at its disposal; for this purpose, it uses the latest in computer equipment and constantly monitors the improvements provided by technological progress.

The main beneficiaries of the CNMV's work are Spanish investors, to whom we must assure adequate protection. To this end, the CNMV focus particularly on improving the quality of information disclosure to the market, and particular efforts are made in the area of auditing and in developing new disclosure requirements relating to remuneration schemes for directors and executives that are linked to the price of the shares of the company where they work.[2] Also, considerable efforts are made to detect and pursue illegal activities by unregistered intermediaries.

The actions of the Commission relate to companies which issue securities for public placement, to the secondary markets in securities and to investment services companies. The Commission also exercises prudential supervision over the last two in order to ensure transaction security and the solvency of the system. These entities are the following: • Collective Investment Schemes, a category which includes: investment companies(securities and real estate), investment funds (securities and real estate) and their management companies. • Broker-Dealers and Dealers, which are entities engaging primarily in the purchase and sale of securities. • Portfolio Management Companies, i.e. entities focusing primarily on managing individuals assets (principally securities).

Through the National Securities Numbering Agency, the CNMV assigns internationally valid ISIN and CFI codes to all securities issued in Spain.

Spain enjoys a modern, efficient regulatory and surveillance system, but we must continue working to perfect it. Our regulatory and surveillance system is among the most advanced in the world, and the CNMV is determined to maintain its quality. New trends in the financial markets call for modifications to the regulations. The CNMV is persuaded that the regulations' efficiency can be enhanced by simplifying bureaucratic procedures, and it will proceed in this direction in the coming years, while always maintaining proportionality between the objectives of contributing to market integration and facilitating innovation and competition, on the one hand, and establishing appropriate investor protection, on the other. Maintaining this proportionality defines what could be understood as "good regulation".[3]

Major efforts also need to be made in connection with building a single European securities market. The European Union wants Europe's citizens to enjoy the undisputed advantages of greater integration in Europe's markets as soon as possible, and it is fostering sweeping changes in European regulations to this end. The CNMV is convinced that these advantages can only be fully exploited in a regulatory framework based on high quality standards under a surveillance system which ensures that those standards...
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