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FAQs FREQUENTLY ASKED QUESTIONS What should I bear in mind before investing in the stock market? I want to invest in the stock market. How do I get started? How much does it cost to invest in the stock market? Is there a minimum cost for being a shareholder? Can I use any bank? Can I operate without brokers? Do all brokers charge the same fees? What returns can I make buying shares? Where can I find information on forthcoming stock market floatations? What are ETFs? What is the Alternative Equity Market (MAB)? Can I buy shares in Latin American companies on the Spanish stock exchange? What is an investment club? What is a capital increase? I live abroad, how can I buy shares listed on the Spanish stock exchange? Can you recommend which stocks to buy and sell? Where can I find analysis and recommendations on listed companies? What are indices? How does the electronic trading system work? Are there minimum shareholding requirements to be able to vote at a company's General Shareholders' Meeting? What is the Investor Ombudsman? What is the IBEX 35®? How is the IBEX 35® calculated? Where can I find stock prices in real time? Where can I find price histories? What is BME? Where can I send my curriculum vitae?
What should I bear in mind before investing in the stock market? Investment decisions must be taken bearing in mind several factors: -Base decisions on facts, not rumours. -Greater potential returns usually come with greater risk. -Establish your investment time frame. A medium to long term investment time frame is recommended -Diversify, meaning do not invest everything in a single product or share. -You can hire a broker to manage your investments and provide reports on how investments are performing. -Not all shares have the same liquidity -Take into account brokerage fees and tax effects.
I want to invest in the stock market. How do I get started? The best way to invest in the stock market is to go through a member firm of the stock exchange (a list is available on the website), which act as direct brokers for stock market investment. First you will have to open a securities account, which is similar to a current account. The only difference is that instead of money the account contains shares or other securities. Each securities account is associated with a current account, from which money will be drawn when a buy order is submitted and where money from sales of shares, dividend payments, etc. will be deposited. The consultancy and know-how that a broker can offer is very useful for decision making. Most stock market brokers provide support via the Internet. You can also make investment orders via non-member firms, but these will in turn channel orders via a member firm. How much does it cost to invest in the stock market? Any transaction in the Spanish market is subject to a series of costs and fees, which must be clearly specified in the administration or deposit contract signed by the customer when opening a securities account. Brokerage costs : Brokerage costs for investors in the Spanish market are among the lowest in the world. Member firms usually charge their individual customers between 0.25% and 0.35% of the transaction amount for each order. Brokers that provide services via the Internet may offer even lower fees. There is usually a minimum fee per transaction. An investor operating via their usual bank or savings bank will, in turn, be charged a further brokerage fee of a similar amount. Prevailing regulation requires brokers to make their fees public and submit them to the Spanish market regulator (CNMV). Investors should therefore be aware from the outset of all costs involved in investing on the stock market. Stock market fees : These are established on an annual basis by the Stock Exchange Governing Body and Iberclear. Both will be proportional to the transaction amount. Stock market fees are calculated based on the transaction amount. The fee is of 1.10 euro for transactions of under 300 euro and up to 13.40 euro for those in excess of 140,000 euro. Custodial or securities administration costs: The custodial fee usually ranges between an annual 0.25% on the nominal amount of securities in custody, although it is often charged on a quarterly basis. A minimum fee is often included. Is there a minimum cost for being a shareholder? The minimum cost would be the value of one share (plus costs added by the broker) of any listed company.
Can I use any bank? Yes, but those that are members of the stock exchange are specialists in stock market brokerage and have direct access to the market. Can I operate without brokers? No, stock market operations must be channelled through brokers. Do all brokers charge the same fees? No, the fees charged by brokers in Spain are deregulated and can therefore vary between firms. They may also vary based on the services offered. All brokers are required to make their official fees available to investors. What returns can I make buying shares? Companies divide their capital into shares. Therefore, by buying shares in a company the investor becomes a partner or owner of the company in the corresponding proportion. The price of a share on the stock market is determined by the free convergence of supply and demand, based on the company's results and expectations. The shareholder's returns will depend on two main concepts: -Capital gains: the positive difference between the price at which the shares were purchased and the price at which they are sold. -Dividends and others: During the time that the shareholder owns the shares, the company may opt to pay out profits amongst shareholders via dividends. Shareholders may also generate returns via other kinds of operations undertaken by the company, such as capital increases, etc. Where can I find information on forthcoming stock market floatations? When a company decides to float on the stock market it is required to submit a "Prospectus" to the market regulator, the Comisión Nacional del Mercado de Valores (CNMV). The prospectus offers investors a complete overview of the issuing company, its financial position and other information to help take well-founded investment decisions. The prospectus is available to the public via the CNMV's website (www.cnmv.es) What are ETFs? ETFs (Exchange Traded Funds) are investment funds, shares in which are bought and sold in exactly the same way as stocks. Unlike holdings in traditional funds, which can only be bought or sold at net asset value, which has to be calculated after each session closes, ETFs are bought and sold on the stock market like any other share, with the same fees. For further information, go to www.bolsasymercados.es/etfs What is the Alternative Equity Market (MAB)? The Alternative Equity Market (MAB ) is a market specifically for small capitalisation companies looking to finance growth, with costs and procedures designed to suit their needs. For more information, go to: www.bolsasymercados.es/mab
Can I buy shares in Latin American companies on the Spanish stock exchange? Yes, the main Latin American companies are listed on the Latibex and are bought and sold like any Spanish stock. They are traded in euros, which means European investors can trade Latin American stocks in their own currency, sidestepping the complexities that come with handling several currencies. Further information is available at www.latibex.com What is an Investment Club? An Investment Club is an association of individuals (legally bound under a Joint Ownership Arrangement) who combine their assets and put them under joint management. The main aim is educational, with investors sharing their know-how and understanding of the share markets with small investment amounts. What is a capital increase? Listed companies increase capital as a means of raising financing via equity. They issue new shares and put them up for sale amongst investors. As with all sources of financing, this comes at a cost, as shareholders will be remunerated by one means or another (dividends, etc.). When new shares are issued, existing shareholders in the company have a preferred right to subscribe the new shares. If they do not want to acquire the shares, these rights can be sold on the stock exchange. I live abroad, how can I buy shares listed on the Spanish Stock Exchange? There are currently no barriers or special procedures required to acquire shares on the Spanish stock market from anywhere in the world. All international brokers have access to the Spanish stock exchange. Contact your usual broker. Can you recommend which stocks to buy and sell? A decision to buy and subsequently sell stocks is a very personal one that should be left in the hands of professionals, who will make decisions based on the investment type, risk level and time frame that suits the customer. Where can I find analysis and recommendations on listed companies? Most brokers, particularly the major firms, have analysis departments. They usually provide their customers with research on specific sectors or shares and publish this via specialist media. What are indices? Indices are stock market instruments that allow investors to follow the performance of a set of listed shares. They are made up of a selection of shares intended to represent the entire market. Indices are increasingly important as benchmarks for portfolio managers, as well as for offering new products. How does the electronic trading system work? The SIBE, the Spanish electronic trading platform, is the electronic system that connects the four Spanish stock exchanges and which member firms use to process their buy and sell orders. All orders go to the same central computer and are assigned a priority level based on price criteria and the time at which they are submitted. If a counterparty exists the order is executed automatically. The Spanish continuous market has evolved rapidly since its foundation in 1989. For example, in January 2007 BME tripled the SIBE's capacity. Since April of 2009 Spanish stock market shares can be traded up to four decimal places, due to the large volume of buy and sell orders on the exchanges, with the aim being to further strengthen the Spanish stock exchange and to consolidate it as the primary liquidity hub for shares traded on the market. (Link a pdf Market Model) Are there minimum shareholding requirements to be able to vote at a company's General Shareholders' Meeting? For listed companies there are no restrictions whatsoever on voting at the General Shareholders' Meeting and one share is equivalent to one vote. However, the largest capital companies generally have the power to request a minimum number of shares to be eligible to attend the meeting. Article 518 of the prevailing Spanish Corporate Enterprises Act on General information prior to the meeting, requires companies, from the date of publication of the notice to the date the meeting is held, to publish uninterruptedly on the company website the total number of shares and voting rights as per the date of the announcement, broken down by share classes, as appropriate. What is the Investor Ombudsman? In 1991 the Spanish Stock Exchange set up the Investor Ombudsman, who's role is to support and defend the interests of stock market investors. Appointed by the Board of Directors, the Ombudsman is a fully independent body. Any individual or organization that believes their rights or interests have been damaged with regards to stock market transactions may turn to the Ombudsman. The Investor Ombudsman has basically four roles. Prevention: it helps provide greater transparency in broker-customer relations and prevent complaints and disputes from arising. Conciliation: it creates the conditions and tools that allow the facts of a case to be known, as well as reconciliation between disputing parties, helping an eventual agreement to be reached. Arbitrational: it provides a channel for claims and arguments, ending with a report containing a solution proposal. Informational: in all directions. Prior to or subsequent to a claim being submitted, aimed at indicating to investors how they can pursue their claims when the Investor Ombudsman finds that it has no jurisdiction to continue with the issue. What is the IBEX 35®? The IBEX 35® is an index made up of the 35 most liquid stocks listed on the Spanish electronic trading platform, used as a national and international benchmark and as underlying for trading derivatives. Technically it is an index of prices, weighted by capitalization and adjusted by the free float of each company in the index. How is the IBEX 35® calculated? According to the Technical Standards For Composition And Calculation of the Indices of Sociedad de Bolsas, S.A.¹, the Technical Advisory Committee² (hereinafter the Committee) takes into account for each share the effective volume traded on the orders market, or primary market, provided that this effective volume provides quality guarantees. The Committee will therefore will track and may discount, if applicable, from the total effective volume traded during a control period, those volumes that are: The consequence of transactions leading to a change in the stable shareholder structure of the company Have been contracted by a single market member in just a few trades, or in a period deemed by the Index Administrator to be unrepresentative. When the effective volume traded declines by such a degree that the Administrator deems the stock's liquidity to have been severely affected Transactions that make require such action due to their characteristics and quantity (effective volumes traded due to stock market floatations or placements of share blocks on the exchange until stabilization in trading of the same) Once liquidity has been assessed, and when stocks show similar liquidity measurements, the Committee will take into account additional differentiating factors when making selections, such as: statistics associated with volumes and the characteristics of trading and the quality of price spreads, rotation and other liquidity measures (volatility, depth of the order book, annualised liquidity index, volume traded in the order book compared with capitalisation, average spread, average weighted spread, Kyle's lambda, etc.). the stability of the index based on its use as underlying in trading derivatives Where can I find stock prices in real time? For further information, visit our website http://www.infobolsa.as/ Where can I find price histories? For price histories contact BME Market Data at [email protected]
or go to the website http://www.bmemarketdata.es/ What is BME? Bolsas y Mercados Españoles (BME) is the umbrella company for all the securities markets and financial systems in Spain. BME has been stock market listed since 14 July 2006 and has formed part of the IBEX 35® index since July 2007. In recent years it has become a benchmark in the industry in terms of solvency, efficiency and profitability. BME is a technically highly advanced company, with a well-prepared team of staff equipped with all the knowledge and resources required to provide a wide range of services, products and high-tech trading systems, giving issuers access to global markets, brokers and investors, both in Spain and internationally. BME is a highly diversified company structured into seven business units representing the broadest and most varied range of products and services that a company in its sector can offer to the financial community: equity, government and corporate debt, derivatives, settlement and clearing, dissemination of information, consulting, new technology and training. Where can I send my curriculum vitae? If you are interested in working with us at BME Group, send your CV to the e-mail address [email protected]
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