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Chapter 10: What We Have Learned about Stock Exchange

Capítulo 10 Lo que aprendimos sobre la Bolsa de Valores stock exchange

By: Ximena Peinado

Last chapter

Only Good things can happen when your company goes public: its value increases, its financial structure is strengthened, it gets financial recognition and quality standards.

In addition, it makes its finances more flexible, improves its image, becomes more attractive to national and international markets, the costs are optimized and the utility margins are increased, among many other benefits.

The list could go on, but the most important thing is that we have caught your attention, and that’s a very good thing for your company’s future. Nonetheless, it is better if we start from the beginning. 

The Stock Exchanges, the centre in which companies can share their stocks, satisfies three interests in society due its many investment possibilities:

  • State
  • Savers
  • The companies.

In addition to stocks, the Stock Exchanges currencies, debt, derivatives and the commodity market.

Additional to stocks, the Stock Exchanges and Value Market also offer foreign exchange, debt, derivatives and the commodities market.

Origins of the Stock Market

The idea of the stock exchange originated in the Van Der Buërse family’s lodging in Bruges, Belgium during the 14th century.

This establishment was in front of the square that became the main commercial center of the city. For this reason, during the 13th century this building was the venue for many business meetings, and the same citizens began to call the economic activity that took place inside that house as “Bürse”.

It was thus that this word flourished in other places to designate the centers of securities transactions. However, officially, the first stock exchange was created in 1602 in the same country by the Dutch East India Company.

Fue así que esta palabra prosperó en otros lugares para designar a los centros de transacciones de valores. Sin embargo, oficialmente, la primera bolsa de valores se creó en 1602 en el mismo país por la Compañía Holandesa de las Indias Orientales.

The key topics you need to remember about the Value and Stock Exchange Markets

In the world there are 60 bags that stand out the most. These vary in their size, trading volume and market capitalization.

For all countries alike, the stock market is beneficial and, fortunately, investment methods have never been as accessible as now.

Accessibility has meant that nations have a strong investment mechanism to obtain national and international resources.

And, over time, this action creates jobs and with them, the development of these companies. Compared with the rest of the countries, in Mexico the market is small.

According to INEGI, in Mexico there are 5 million 53 thousand 130 businesses and companies . Of which only 146 are listed on the stock market or participate in it with debt or shares. Of the most recognized and important bags are; The New York Stock Exchange, the London Stock Exchange, Hong Kong, Toronto, Frankfurt, Nasdaq and Euronext.

These centres only comprise a fraction of the financial system in Mexico, the two most important exchanges in the country being the BIVA and the Mexican Stock Exchange.

Both the rest of the Mexican financial system, as well as the stock markets, are governed by authorities such as the Ministry of Finance and Public Credit, the National Banking and Securities Commission, the National Insurance and Surety Commission, among others.

In the same way, there are three associations that also make up the Mexican financial landscape : SIF-ICAP, the Mexican Association of Stock Market Institutions (AMIB) and the Association of Banks of Mexico.

Requirements to list your company

Among the requirements, they must be found in the history of operations of the last three years:

  • Stockholders’ equity above 20 million udis
  • A positive average profit in the last 3 years.
  • Shares to be sold representing 15% of the capital
  • Have at least 10 million titles for the IPO
  • 200 shareholders.

Once having the essential characteristics, the next step is to prepare the company in Corporate Governance to regulate the relations between shareholders and the company.

It is also necessary to have the support of a brokerage firm that signs the placement agreement with the issuer and analyzes the documentation and information related to the business.

At the same time is the rating given to your company for being able to meet its financial obligations; These are carried out by the Securities Rating Agencies.

Having all of the above, the next step is to submit an application for registration issued by the National Banking and Securities Commission.

The securities are then promoted and sold to the key investing public, so that they can begin to be sold formally in the marketing stage.

In the final stage, the stock is marketed and a demand book is built : the final price is reached and placed on the stock market.

Be an expert in the Mexican Stock Exchange

The Mexican Stock Exchange has five different effective instruments that vary depending on where the money that is collected with the shares will go, or the public offering that will be placed on the stock market. These are: short-term debt, long-term debt, stocks, Fibras, and the Development Capital Market.

It is important that both shareholders and companies know their rights and obligations in the stock market. These are provided for in the Securities Market Law, composed of 413 articles that encompass all issues relevant to the stock market.

In addition to this series of guidelines, the National Securities Banking Commission has general provisions for issuers of securities and other participants in the securities market.

Although we know of failed cases like Pets.com, Readers Digest, Dell and Jc Penney; We came to the conclusion that the failure of these companies was due to poor planning, impulsive actions and the sale of false expectations about your company.

Contrary to these failures, the success stories stand out , of which your company could be the next. You have to follow the steps of those who came to the right path and learn from the experience of José Cuervo, Palacio de Hierro, Google or Amazon, which were able to expand and grow through a correct management of their actions.

In this series you have learned everything about bags: from their origin, to their handling and current situation in the world.

Now you have all the necessary knowledge to dominate the stock market and thus be able to take advantage of the great benefits that await you if you know how to apply everything you have learned with us at PR1ME Capital.

Stay tuned for our page, as we will be putting out more interesting and educational financial series for you.

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