Fixed
Income
3
37
STRUCTURE ORGANISATION AND OPERATION
OF THE SPANISH SECURITIES MARKET
Mortgage-backed bonds: Securities issued by cre-
dit entities and guaranteed by all mortgage loans gran-
ted by the entity. They can have explicit returns (fixed
or variable) or implicit (zero coupon or discount). The
tax treatment is similar to that for bonds.
Preference shares: Marketable securities that are
part of an issuer’s capital stock, but which grant rights
very different to those of ordinary shares. The principal
features thereof are as follows: There are no restrictions
on free transfer; they do not enjoy political rights, ex-
cept in exceptional cases; they cannot be exchanged or
converted into ordinary shares of the issuer or the gua-
rantor; they do not have preferential subscription rights
in future capital increases; they carry with them the
right to receive a pre-determined dividend of a fixed,
non-cumulative amount, and its distribution is done
on the basis of the issuer’s distributable income or the
guarantor’s; they have preference in the payment over
the issuer’s ordinary shares; they can be traded, settled
and cleared in accordance with AIAF rules.
Matador bonds: Peseta issues made for non-resi-
dents. As the peseta has disappeared, these securities
no longer exist.
Regional government bonds: Securities issued by
credit entities and guaranteed by all mortgage loans
granted by the entity. They can have explicit returns
(fixed or variable) or implicit (zero coupon or discount).
The tax treatment is similar to that for bonds.
Since 2007, the AIAF has accepted issues by Spa-
nish issuers in four of the main non-Euro currencies: US
dollar, Pound sterling, Swiss franc and Japanese yen.
In order for securities to be traded on AIAF, they
first have to be issued and then admitted to the market.
They are issued on the primary market, and without it
there is obviously no secondary market. They are issued
on the primary market, without it there is obviously no
secondary market. For this reason, AIAF, as a secon-
dary market, is very interested in the development and
growth of the primary market.
Trading systems
Clearing and settlement
The trading of operations in decentralised markets,
which as explained before is generally the case for fixed
income, is not done via a specific means or a single
model for executing orders, but is the result of a con-
fluence of procedures, platforms and mechanisms, both
electronic and open outcry.
QUOTATIOIN AND TRADING
Securities on AIAF are quoted via a system of price
dissemination whose rules are set out in Articles 27, 30,
36 and 39 of the Market’s Regulations.
Trading and contracting are performed among
market members in a decentralised way (i.e. via mem-
bers’ trading desks without the need to go to a specific
location).
Market members can carry out trades for their own
account or for third parties, in other words, their clients.
All market members may take part in general
trading, also known as “third stage” trading, which is
carried out over the telephone, either directly among
members interested in trading or through a dealer-
broker who helps members find a counterparty, or via
electronic multi-dealer systems on whose order books
are simultaneously recorded the buy and/or sell offers
made by all the institutions authorised to participate in
the platform, which in this case can be both financial
entities and qualified investors such as CISs, insurance
companies, etc.
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