Cabinet Meeting Approves The Creation Of Mercado Alternativo Bursátil – MAB - Costs For SICAVS Are Reduced By Over 50% On Average - MAB Broadens BME’s Services Range

The Spanish Cabinet meeting, which was held on 30 December, has given its approval for the creation of the Mercado Alternativo Bursátil - MAB – which Bolsas y Mercados Españoles has promoted to offer a specific treatment to stocks with particular features. The market will help SICAVS in the obligation established by the new collective investment regulations to guarantee liquidity for the shares.

BME offers SICAVS a new trading platform which will help them to comply with the liquidity requirement and provides back office and information dissemination services.

MAB will be extended in future to securities other than SICAVS, which, due to their particular features, require specific treatment. They are low capitalisation companies whose shares are generally affected by low liquidity problems and low visibility among the investing public, which until now have not considered going public due to the the listing requirements and the costs associated.

The Cabinet Meeting agreement states: “through this initiative small and medium sized companies will be able to obtain financing on the stock market, although not through the primary market of the stock exchanges, which entails organisational and administrative burdens outside the reach of SME’S, but through a specific trading system which is more flexible regarding regulation and tailor –made to the needs of these enterprises. Similar initiatives have been developed in other EU member states, since it is a common issue to be dealt with”.

Trading in MAB will be carried out on the SIBE electronic trading platform, in contrast with the current open outcry trading model, which will offer participants more agility, transparency and liquidity.

The wide range of services provided by MAB resolves to a great extent the administrative and legal complications posed by the new regulations established for these companies. The costs of this service for SICAVS are on average more than 50% lower than those of the open outcry model.

Market members, Investment services companies and credit entities which at the time of the creation of the market were already members of the Spanish exchanges will become members of MAB without having to meet any additional requirements. In addition to this, the so called Sociedades Gestoras de Instituciones de Inversión Colectiva – SGIIC and self-managed SICAVS will be allowed to operate on the market to match operations on a net value basis for the SICAVs shares they manage, providing liquidity for the shares without having to resort to another intermediary.