The book-entry market came into being in 1987, replacing the old system of physical certificates with a new system entailing entry in a securities account in favour of the holder.

 In other words, securities are represented by an identifying entry in special account records, normally computerised.

 The record of the securities traded on the public debt market is kept centrally by the Book-Entry System and also by the Management Institutions, which keep individual securities records for each client (or third party).

 The Book-Entry System keeps the accounts corresponding to all securities admitted to trading in the public debt book-entry market: individually, in the case of the securities accounts kept on their own behalf by holders authorised to operate directly in the system; or globally, in the case of Management Institutions' third-party accounts.

 Management Institutions, meantime, keep the accounts of those not authorised to operate through the Book-Entry System (third parties). To this end, they maintain a global account in the Book-Entry System which must stand, at any given moment, as exact cover for third-party accounts.

 The entries made by Management Institutions in respect of client securities balances notified to and entered by the Book-Entry System have the same force as if they had been made by the Book-Entry System.

 When a Management Institution also holds accounts on its own behalf in the Book-Entry System, it must keep these totally separate from third-party accounts.

 Management Institutions must extend certificates accrediting the book entries made in each holder's name. Such certificates must be coded in such a way as to guarantee that the institution's records concur with the information notified to the Book-Entry System. Certificates are neither transferable, marketable nor representative of the security and merely accredit and identify the entry made.

 Since its launch, the book-entry system has grown in stature. As we write, most public debt is represented in this way, in preference to the old bond certificate. The new system avoids the drawbacks of security handling and delivery, and dispenses with the services of an authenticating officer at every transaction in favour of the centralised control of all operations by a book-entry system which channels all information available on cross transactions and on all the tradeable references outstanding. This, in turn, facilitates the secondary-market holding and transfer of government securities, helps with the raising in of government financing and enhances financial market efficiency, while improving the management and freeing up the traffic of government debt securities.

 The Book-Entry System is run by the Bank of Spain on the Treasury's behalf. Securities trades are mainly of Treasury origin, though certain Autonomous Communities and Public Agencies have also used it for their issues. It is the biggest and most important forum for the sale and purchase of Treasury securities, and must be notified of every transaction.

 The importance of the Book-Entry System lies not only in the large volumes transacted but also in its remit to administer the debt lines marketed.

 Its main functions are:

  • 1. To administer the issuance and redemption of securities traded in the book-entry system.
  • 2. To pay the interest accrued and effect the transfers of balances arising from secondary market transactions
  • 3. To facilitate the establishment of pledges and other guarantees and the identification of the same.
  • 4. To organise the secondary market by establishing clearance and settlement procedures instrumented by simultaneous entry of securities transfers in Book-Entry System accounts and the corresponding balancing entries in Bank of Spain cash accounts.

 In April 2003 birth of Iberclear, the new post-trade operator for transactions in the Public Debt Book-Entry and other Spanish markets like AIAF or the Stock Exchanges. One effect, it is hoped, will be to boost the transparency of Spanish financial markets. Iberclear arises from the merger of the Banco de España Book-Entry System (CADE) ant the Securities Clearing and Settlement Service (SCLV)