56 measures to improve the competitiveness of our financial markets

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Javier Hernani (CEO of Bolsas y Mercados Españoles)| In Spain alone, in the last decade, the markets have channelled €217,000 million worth of financing to companies in the form of capital, which gives a clear indication of their importance. If we add the contribution of fixed income, which includes Public Debt, the figure rises to €1.5 trillion channelled through the markets managed by BME. This is equivalent to many business projects undertaken, many growth plans carried out, and a lot of impetus for growth and the well-being of society. Despite these figures, in recent years there have been signs of a loss of competitiveness in the Spanish financial markets. In order to analyse the situation and, above all, to propose specific measures to improve it, BME has prepared a White Paper on boosting the competitiveness of capital markets in Spain. The study, which has benefited from the opinion of some thirty leading Spanish financial institutions and authorities, concludes that there are a series of competitive disadvantages that hurt Spain compared to the main international markets.

“In Spain, in the last decade, the markets have channelled €217,000 mn in financing to companies. Adding the contribution of fixed income – which includes public debt – the figure rises to €1.5 trillion. We have all the ingredients: a first-class financial industry, market infrastructures of the highest international standards…. It’s just a matter of clearing the way.”

The current tax and regulatory regime in Spain places the capital market at a disadvantage compared to other countries. This is particularly relevant in a context of strong global competition. Moreover, a size deficit has been detected, which is also very significant because the financial markets are the greatest allies in fostering the growth of listed companies. Spain has leading companies that are world leaders in their sectors and, undoubtedly, being listed on the stock exchange has been an incentive for this successful journey.

How to improve. Even more important than identifying the situation is to propose solutions. Our White Paper has a constructive spirit; it seeks to be a call for reflection and action, based on the conviction that boosting the competitiveness of our financial markets must be a priority for everyone, because there is much to be gained as a country by doing so. We therefore propose 56 concrete measures to improve the competitiveness of Spain’s financial markets and bring them to the level and influence they deserve given the size of the Spanish economy. Most of the proposed measures would be quick and easy to implement, and their impact would be significant. In many cases it is simply a matter of bringing Spain’s regulatory and fiscal framework into line with that of neighbouring countries.

“In many cases it is simply a matter of bringing Spain’s regulatory and fiscal framework into line with that of neighbouring countries. The current one in our country puts us at a disadvantage”.

The 56 measures we propose in the White Paper are divided into four main blocks: encouraging companies to join the Spanish stock markets, with measures such as simplifying and speeding up the listing process or maintaining the application of tax incentives under the start-up law when companies start trading on multilateral trading systems such as BME Growth; boosting the channelling of investment to companies, with measures such as developing formulas to encourage retail investors to participate in Spanish stock markets or making investment in listed Spanish SMEs through collective investment vehicles more flexible and encouraging them to do so; attracting the circulation of savings and investment in national markets, avoiding their relocation, with measures such as eliminating the Financial Transaction Tax in Spain or developing a communication strategy to achieve a real increase in the volume of fixed-income issuance by large Spanish companies; and, finally, fostering the effective development of new regulated investment and financing ecosystems, with measures such as speeding up the creation of structures to take advantage of the simplified MiCA regime or establishing an incentive tax regime for digital asset activities.

These are just some of the many proposals included in the White Paper, which can be consulted in full on BME’s website. They all have one thing in common: they seek to remove all the barriers and competitive disadvantages currently facing capital markets in Spain. This is necessary and the time is ripe, because global competition is increasing. We have all the ingredients: a first-class financial industry, market infrastructures that meet the highest international standards of digitisation, security, transparency and liquidity, with the best spreads for Spanish securities and proven experience. It is not a question of building from scratch, only of clearing the way, of making things easy.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.