Financial Markets: A Comprehensive Analysis
Banking Activity The banking business has significantly evolved. It’s an activity rapidly integrating into universal service strategies, where financial activity is now commonplace. This development highlights the merging and integration of entities. Retail banking (private clients, small businesses, shops, etc.) and wholesale banking, which includes corporate banking (dealing with large companies), merchant banking (specializing in global business), and institutional banking (serving public bodies), alongside retail and private banking (specialized in managing high-net-worth individuals’ assets), utilize the internet as a distribution channel to reach target markets and reduce costs. The internet serves as a central core for banking. Banking activity: Debit transactions involve obtaining customer savings through various methods. This money-raising activity is called passive operations; funds received by banks, savings banks, and cooperatives are liabilities. Active operations involve investing these funds and customer deposits in financial products like loans, credit, and bill discounting. Lending is also an active operation, as the funds a credit institution provides are assets on its balance sheet. Mediation services support customers with receipts and payments. With checking and savings accounts, funds move through transfers, bill payments, securities services, etc. These services expanded (receipt management, payroll services, credit cards, etc.) and now constitute a substantial part of financial institutions’ activities, extending into non-banking sectors. This resulted in new banking products like pension plans, mutual funds, leasing services, and various payment methods.
Securities Market Act and Exchange Commission The Securities Market Law regulates primary and secondary securities markets. It establishes organizational and operational principles, rules for participants, and oversight. Securities issuance must be reported to the National Securities Market Commission (CNMV), the body designated by the Securities Market Law. The National Securities Market The SML mandates a public body with legal personality to perform the functions assigned by law and the Ministry of Finance, overseeing and inspecting the stock market and its participants. The CNMV aims to ensure market transparency, proper price formation, and investor protection. Investment services companies are financial institutions providing investment services commercially to third parties. These include: securities companies (operating independently or as agents), securities brokers (acting as agents for others), and portfolio management companies (managing portfolios and advising investors).
Financial Markets Primary markets allow the acquisition of newly issued securities. Acquisition methods are determined by regulations (e.g., public debt issued by the Treasury or via prospectus). Secondary markets allow buying and selling existing securities. Secondary markets include the stock market, the public debt market, futures and options markets, and other authorized markets. Bolsas y Mercados Españoles (BME-X) represents the integration of various financial markets under a holding company. This society groups bond, equity, and derivatives markets, clearing, and settlement operations in Spain. Iberclear maintains book-entry securities accounts and clearing and settlement. Iberclear resulted from merging former securities clearing and settlement entities and the Bank of Spain’s public debt operations.
Government Bond Markets and Institutions Government bond debt products include Treasury bills, bonds, and obligations. State debt is circulated through primary market auctions conducted by the Treasury. The Bank of Spain manages the Book-Entry Debt Market. Iberclear, via the CADE platform, handles clearing, settlement, and accounting. Purchases and sales are settled simultaneously between securities and cash accounts at the Bank of Spain. A subscription credits the securities account and debits the cash account; redemption reverses this. Interest is credited to the cash account. Direct accounts at the Bank of Spain The Treasury and the Bank of Spain allow direct purchase of state debt instruments in the primary market via direct accounts at any Bank of Spain branch. The Bank of Spain and other market managers maintain a global account with Iberclear for subscribers without Bank of Spain accounts. Other issuers of public debt Besides the state, autonomous communities, municipalities, and public enterprises (like the Official Credit Institute, ICO) issue public debt securities with varying characteristics. Secondary market government bonds Owners can sell public debt securities before maturity in the secondary market.