In 1989 a far-reaching and ambitious reform of the Stock Market was carried out. The Stock Market Law of 1988 provided for an extensive modification of the Spanish Stock Market, giving a new legal framework that provided for its complete incorporation into the international stock exchange system, making its structures and operation procedures compatible with those of its major economic partners, taking into special consideration the objectives of the European Community Single Market.

The Law affected three basic areas:

1. the primary markets (the issuing and public placement of securities).
2. the secondary markets (dealing of stocks in organized markets).
3. the creation of a supervising and inspection body (the National Stock Market Commission) and of a sanctioning system for individuals and corporations participating in the markets

Regarding the primary market, which in 1992 registered a volume of 3,675,728 million pesetas, the National Stock Market Commission verified that the securities prospecti fulfilled the legal stipulations for providing adequate information to the public, with respect to both the characteristics of the stock in question as well as to the economic situation of the issuer. The audits of the three previous fiscal years are required for this procedure. In 1992 the Royal Decree on issues and the public sale of securities was approved, which transposes the relevant European Community regulations to the Spanish legal framework.

In the secondary markets, the reform brought about the creation of Securities Companies and Agencies with the legal title of corporations (Sociedad Anonima), whose constitution and creation is subject only to the verification of certain corporate capital requisites as well as of proven professionality of its partners and directors. By 31 December 1992, there were 130 companies registered, with an active total of 576,235 million pesetas. Of these, 55 were members of the Stock Exchange, who are the only entities authorized to deal on the Stock Market. Their management is governed through their participation in the corporate capital of the Stock Market Supervisory Companies. A free system of fees and tariffs has been in force since 1992.

In conjunction with these reforms, which affected the institutional and constitutive aspects of the Madrid, Barcelona, Valencia and Bilbao Stock Markets, the Interconnected Market or the Continuous Market began to function in April of 1989. I is based on a computerized network which connects the four exchanges. On 31 December 1992, there were 124 stocks quoted on the interconnected market, and 89% of market dealings (4 billion pesetas in 1992) was carried out on the interconnected system.

In 1992, the Compensation and Assessment of Securities Service was formed, the last institutional reform stipulated in the Stock Market Law of 1988, and a key instrument for the increased competitiveness of the Spanish Exchange. The entities participating in this Service are banks, credit unions and securities companies and agencies, as well as the various Stock Markets themselves. The governing principles of the assessment system that the service has instituted are as follows: universality, delivery upon payment, objective assessment dates, payment guarantees and financial neutrality.

An important step achieved in 1992 was the regulatory development of the clauses of the Stock Market Law, with particular emphasis on the release of shares in quantity, which replaces once and for all the system of paper shares with a computerized system.

Other secondary markets were added to the principal exchanges in 1991, such as the public debt futures and options markets, and that of the market index and quoted shares futures and options exchange. Authorization to act as an organized AIAF market, a fixed income market for wholesalers, was also achieved. In practice, the Spanish stock market today presents all the necessary elements to function as a competitive market.

In conjunction with the greater professionalization of the secondary markets, a strong interest on the part of the small investor has been noted with respect to collective investment institutions, the number of which has increased substantially. In 1993, there were 822 such entities, worth some 10.7 trillion pesetas.