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What is the Madrid Stock Exchange?

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  • Written By: Patrick Roland
  • Edited By: Kathryn Hulick
  • Last Modified Date: 20 November 2016
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The Madrid Stock Exchange, also known as the Bolsa de Madrid, is the largest securities and bond trading market in Spain. This stock market has one of the longest and most colorful histories of any other European market. The current incarnation of the market uses a fully electronic system and works with a large index that accounts for billions of Euros worth of trading.

The history of this exchange goes back more than 200 years, which makes it one of the oldest in the world. The first founding of a stock market in Madrid was not a success, though. In an attempt to mimic the financial boon of stock markets in Brugge and Amsterdam, Spaniard Jose Bonaparte opened a stock exchange in a monastery and church in Madrid in 1809. The city, however, was not a major center of commerce at the time and the new market quickly went out of business. It would be over 20 years before the Madrid Stock Exchange would be permanently established.

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Opening its doors in 1831, thanks to a law being passed that established a national market, the Madrid Stock Exchange was born. Over the next 100 years the market saw many fluctuations due to the Spanish government losing control of countries like Puerto Rico, the First World War and the Great Depression. The biggest change occurred from 1936 to 1940, when the market closed due to the Spanish Civil War. After the Second World War ended, the market enjoyed stability and prosperity, joining the European Union and, thus, beginning to trade all its stocks based on the Euro.

A dedication to the most modern technology available is the cornerstone of the modern Madrid Stock Exchange. From the beginning of the exchange up until the 1990s, all trades and deals were done on the floor of the exchange and handled verbally. In 1993 an all-electronic system was adopted that allowed for more efficient trades to be made and for better record keeping.

The Madrid market bases its trades on the Madrid Stock Exchange Index, a directory used to measure the performance of select stocks. The index monitors several different national and international industries that are important to Spain, including construction, financial companies, energy companies, consumer goods and more. The IBEX 35 is a concentrated form of the Index, shortened to the top 35 most liquid stock traded on the Madrid market and is comparable to the United States' NASDAQ index.

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