Bolsa Mexicana de Valores SAB de CV

BMV:BOLSAA

Earnings Call Transcript 2019-Q2

[Operator]

Welcome to the Second Quarter 2019 Bolsa Mexicana de Valores Earnings Conference Call. My name is Hilda, and I will be your operator for today. [Operator Instructions] Please note that this conference is being recorded.

I will now turn the call over to Mr. Ramón Güémez. Mr. Güémez, you may begin.

[Ramón Sarre, executive]

Thank you. Good morning, and welcome to Bolsa Mexicana de Valores Second Quarter 2019 Earnings Conference Call.

Before proceeding, I would like to provide a brief safe harbor statement.

This presentation contains forward-looking statements and information related to Bolsa that are based on the analysis and expectations of its management as well as assumptions made and information currently available at Bolsa.

Such statements reflect current views of Bolsa related to future events and are subject to risk, uncertainties and assumptions. Many factors could cause the current results, performance or achievements of Bolsa to be somewhat different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in general, economic, political, governmental and business conditions both on a global scale and in the individual countries in which Bolsa does business, such as changes in monetary policies, inflation rates, in prices, in business strategy and various other factors. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary considerably from those described herein as anticipated, believed, estimated, expected or targeted. Bolsa does not intend and does not assume any obligation to update these forward-looking statements.

I would also like to remind participants that today's call is being recorded and a replay of this call will be available online on July 18 at Bolsa's corporate website, www.bmv.com.mx.

During this call, all figures are in Mexican pesos and compared to the second quarter of 2018, unless stated otherwise.

This call is intended for the financial community only and the floor will be open at the end to address any questions you may have.

Joining us for today's call are José-Oriol Bosch, our CEO; Roberto González, SVP of Indeval; Gabriel Rodriguez, CEO for ICAP; Jose Miguel De Dios, CEO for MexDer; Enrique Camacho, Director of Commercial Coordination and Client Relations; Roberto Gavaldón, Director of Communications; Luis René Ramón, Investor Relations Officer; and myself, Ramón Güémez.

I would now like to turn the call over to our CEO, Oriol Bosch.

[José-Oriol Par, executive]

Thank you, Ramón. Hello, good morning, everyone. Thanks for joining us for the second quarter earnings conference call. I will outline the developments in the period and thoughts going forward, but first, let me take you through the key financial results.

When comparing quarterly results, we have to keep in mind that the second quarter of 2018 presented nonreoccurring revenues in SIF ICAP as well as unusual volumes in traded-related businesses, given that the Mexican presidential election happened in July 2018.

The second quarter 2019 results show that BMV has a strong and well-diversified business model and highlights the need for continuing executing our medium-term strategy.

In a quarter, our average daily traded volume decreased 24%. BMV reported revenue for MXN 884 million, only 4% or MXN 34 million below last year's second quarter in spite of the nonreoccurring revenues we had last year.

Revenues for this quarter exceeded the quarterly revenue average of 2018. The results were driven by our fee-related businesses, especially Information Services and the central securities depository Indeval.

Additionally, it is relevant to mention that the reduced fee schedule in listing and maintenance had a negative impact of MXN 24 million this quarter. On the other hand, our expenses increased by just MXN 7 million or 1.7% because of our discipline in cost control and optimization initiatives. The growth is the result of new headcount related to project that began last year as well as new regularly investments in developing flexible Disaster Recovery Plan, DRP.

Operating income and EBITDA reported minus 8% and minus 3%, respectively, and net income declined by 10% to MXN 331 million for the quarter.

The EBITDA margin was recorded at 58% considering the amendments to IFRS 16, which eliminated the dual accounting model for leases that distinguishes between financial lease contract that are recorded on the balance sheet and operating leases which are not. The adjusted EBITDA for the second quarter 2018 was 59%, 156 basis points higher than on the second quarter of 2019.

I will now review in detail our traded-related businesses results. In Cash Equities trading and screening, revenue was registered at MXN 121 million, down 16% compared to 2018. The average daily traded value for the second quarter was MXN 12.7 billion, down 24% year-over-year. It is important to note that CCP provides clearing services for all Mexican equities.

In Derivatives trading and clearing, revenue decreased by 12% to MXN 45 million as a result of lower volumes in trading; and in turn, lower margin deposits. As we have mentioned in the past, BMV continued working with the Mexican government and financial regulators to incentivize the development of a formal and standardized Mexican derivatives market, including the authorization for more authorities or pension funds to trade derivatives. We are working towards receiving authorization to lift electricity future contracts in the last quarter of the year. On a positive note, the second quarter was stronger than the first quarter of 2019 explained by higher trading in dollar futures year 28 swaps and SMB, BMV, IPC index contracts.

SIF ICAP revenue was down MXN 23 million or 14% as a result of a onetime income for MXN 12 million due to the resolution of our labeled low suite in SIF ICAP Mexico and the devaluation of the Chilean peso against the Mexican peso, which had a negative impact on SIF ICAP's Chilean revenue.

In view of the above, the second quarter of 2019 was stronger when compared to the first quarter of the year. SIF ICAP revenues grew 16% quarter-over-quarter, mainly explained by higher volatility in the Chilean market and new offshore customers.

Regarding our nontrading business results, Information Services increased 20% or MXN 23 million to MXN 137 million, as a result of new distribution channels and the commercialization of products developed last year. [ Bolsa ] revenues showed a similar behavior to that observed in the second quarter of 2018. As for market data, it presented nonreoccurring revenues of MXN 10 million and MXN 8 million in second quarter 2018 and second quarter 2019, respectively.

Excluding nonreoccurring concept, the growth for period was 22%, or MXN 25 million in additional revenues.

Central securities depository, Indeval, revenue was up 9% or MXN 21 million to MXN 253 million. As historical records have explained by the growth in services related to the global market, the SIC, which helped to offset the 1% decline in the value of the assets under custody. While reporting record high revenues, I am glad to share with you that the changes made in the third quarter of 2017 to the business model of the global market have generated MXN 230 million in savings during the first half of 2019 for all clients of Indeval.

Listing and maintenance revenue decreased by 13% or MXN 22 million to MXN 149 million. The result is explained mainly by the reduced fee schedule applied in the first quarter of 2019 and by listings with a lower amount placed in the medium- and long-term debt market as well as fewer listings in the stock and alternative markets.

All in all, the discounts had a negative impact of MXN 24 million for the quarter, MXN 5 million in listings and MXN 19 million in maintenance.

New listings in the short-term debt market grew 31% and there were new issues of CERPIs and CKDs. [indiscernible] [ partnered ] for MXN 1.9 billion, [ BMIC Latin ] for MXN 939 million and [ Active ] for MXN 570 million.

Expenses for the quarter amounted to MXN 423 million, up 1.7% or MXN 7 million compared to last year's second quarter, which is explained by the following items: personal expenses increased by MXN 13 million due to salary increases as well as new provisions in information security and customer relations. Technology was down MXN 33 million in the second quarter, MXN 20 million were reclassified from technology to depreciation as a result of changes in the accounting standard IFRS 16 and MXN 13 million because of cost optimization of 2018 project, such as the optimization of information and communication from the global market SIC and the connection with international custodians as well as implementation of infrastructure with high availability.

Depreciation increased by MXN 26 million, MXN 20 million due to changes to IFRS 16 and MXN 6 million because of project completed in 2018 and new hardware leases. Rent and maintenance presented an increase of MXN 3 million as a result of the alternate operations center and building maintenance work.

Consulting fees up MXN 3 million related to the flexible Disaster Recovery Plan. Sub-custody decreased MXN 6 million explained by better commercial terms as a result of the consolidation of international custodians for the global market, the SIC. The results of the quarter led us to an operating and EBITDA margin of 52% and 58%, respectively, and a net income of MXN 331 million.

Now let me turn to BMV's medium-term strategy and how it is unfolding. BMV's strategic initiatives are focused on further development of post-trade and Market Data initiatives. Protection of legacy business by building new added value services and work closely with buy-side clients and regulators. Regarding the further development of post-trade and Market Data initiatives, we have made great progress in partnering and aligning our products and services to the needs and interest of our clients with 3 main revenue-generating initiatives. At this moment, we will not share revenue estimates, but will be included in our 2020 guidance. First, in Indeval, we have started implementing RPAs on robotic process optimization to perform repetitive business processes and reduce operational risk as well as analyzing web platforms to have live communication with clients and improve customer services. Additionally, we are building value-added services such as corporate actions, cash management through a third-party, tax services and post-trade settlement data, to name a few.

The former actions together with the implementation of suite most robust platform, AMH, will allow us to connect more efficiently with international custodians.

Without a doubt the direct cost to the project will provide a new offering to international custodians and generate additional revenues in Indeval starting next year.

Second, regarding our Latin American Exchanges Data, or LED venture, I can share with you that preparations on developing data products are on time. LED's goal is to distribute standardized data in a single format directly to the middle and back office of financial institutions. We expect to start distributing the new products in the fourth quarter of 2019. And third, we are analyzing new opportunities in the post-trade segment, we will keep you updated in the following months.

Regarding the protection of BMV's legacy businesses, I am glad to share with you that a month ago we launched an app called Emisoras BMV, where all the companies listed in the Mexican stock exchange can chat and engage directly with our customer service center regarding delivery of information, deadlines, relations and reservation of meeting rooms at BMV's emblematic building for free, among other topics. Furthermore, in aggregate, we will be launching an uplift to BMV's trading engine by increasing the functionality to our member broker and their clients to trade baskets and replicate simultaneously indices and global portfolio optimized strategies.

BMV's clients will be able to execute multiple trades in microseconds, minimizing manual entries and price differences in order to deliver the same performance as the global portfolio strategy.

As for getting closer with buy-side clients and regulators, BMV continues working together with the authorities and financial regulators to develop the most liquid, transparent and efficient capital market as well as a Mexican derivatives market. This includes assisting authorities in the process of receiving authorization to trade derivatives.

During the second quarter, the international quotation system for the global market reached a record of more than 2,000 listed securities and more than MXN 800 billion in assets. It is worth noting that this platform developed by the BMV is unique in its kind and has been an example for other global stock exchanges to attempt to replicate it.

Furthermore, in the World Environment Day, BMV announced its sustainable strategy in line with international best practices, which includes 5 lines of action: weight management, admissions, neutralization, energy efficiency, water saving and continue being a leader in the Mexican financial markets.

Finally, I would like to reiterate that 2019 is a transformational year for the company. We expect to continue facing headwinds with our traded-related businesses, but our cost control discipline will definitely play a role in the second part of the year. As we have stated in the past, we maintain our beginning of the year guidance and we will work towards achieving it. At the same time, we will continue investing for growth by expanding our portfolio of products and services and by focusing on top line expansion while maintaining our cost-control culture. With that, I thank you for your time. And together with my colleagues, we will be gladly answering any questions you might have. Thank you.

[Operator]

[Operator Instructions] We have a question, Ernesto Gabilondo from Bank of America.

[Ernesto María Gabilondo Márquez, analyst]

Three questions from my side. During the quarter, leasings contracted 34% year-over-year due to weak macro conditions and low business confidence. On the other side, we see maintenance fees declining 10% year-over-year due to lower medium- and long-term debt issuances and the discount price. So can you share with us how much do you think was related to the macro conditions and how much to the discount plan? And my second question is kind of related to the first question. Given the weak macro conditions in the country, what will be the management's strategy to mitigate a likely lower activity in equity listings and medium- and long-term debts? You already mentioned part of your medium-term strategy, but would it be by increasing those revenues, related not to market conditions or would it be, as you mentioned it also, by reducing costs? I think if you can give us a little bit more on this, will be very helpful. And on my last question. If, at some point, we start to see lower interest rates, do you think this could help to increase equity activity? Or do you think that higher equity activity will depend more on better business confidence and economic activity? Any color on this will be much appreciated.

[José-Oriol Par, executive]

Ernesto, good morning. The -- regarding your first question, the impact of the fee reduction for the maintenance fees for the quarter is MXN 24 million, for the first half would be double that, MXN 48 million. The rest would be low-economic conditions. If they continue, they impacted listings more directly, and reduced listings have an impact on next year's maintenance, not necessarily on these ones.

Regarding your second question, whether we would be achieving -- we will work to achieve guidance whether it would be through looking for new revenue opportunities or through cost controlling. Our goal is to get us close to our guidance as possible in this year.

And for your last question, whether lower interest rates can increase trading activity. In theory, yes, but in practice, we hope so too.

[Ernesto María Gabilondo Márquez, analyst]

Okay. So just a follow-up on the first question. So can you share with us the discount plan that you're implementing is pressuring at some point the maintenance fees or other trading revenues? And then a follow-up in the last question. Do you think that will be -- the increased activity will be more to lower interest rates? Or you think it will be depending more on the better business confidence and better economic activity in the country?

[José-Oriol Par, executive]

So the discount plan is specifically guided towards maintenance. So maintenance has, let's say, it's always had a healthy growth. It's decreasing by MXN 40 million quarter-over-quarter and this is the net effect of the growth and the MXN 24 million impact of the fee reduction. On the trading equities -- on the trading revenues, the reduction is basically in line with the reduction in trading volumes or value. So we haven't seen -- there's no price impact there. Now -- and whether increase in volumes would be better economic conditions or reduced fees, it's a mixture of both, I guess. I mean the theory says that lower interest rates would increase investments in other projects and that should increase trading. So -- we hope so.

[Ramón Sarre, executive]

And I don't think that it is just interest rates. And as a reminder, in 2015, Mexican interest rates, overnight rates in Mexico were at 3%. The average traded volume by this time was MXN 13 billion. Last year, rates were at the same levels as at the end of the year that we have today and the traded volume was close to MXN 16 billion. So the -- I don't think that there is a direct relation in between interest rate level and the traded volume. I think that volatility, it is very important. And last year, in particular, during the second half of 2018, we had a lot of volatility, not just because of the elections but because of some news that had impacted the market starting one month after the presidential election with the international airport cancellation news and a couple of other news that follow it. And another thing is that 40 -- more than 40% of the total traded volume today is in the global market in the SIC and there is a high correlation in the traded volume in the SICs with the volatility of the Mexican peso, as it is also used as an FX trade just like hedge. So I think that more likely you see on the currency, it's also very important for the traded volume. And the volatility in the Mexican peso this year has been lower than what we did see last year.

[Operator]

The next question comes from David Soto from Santander.

[David Soto, analyst]

We have just three questions, one regarding the cost. Which are the actions that you are going to take in the next years, and should we see a continuing improvement on costs? And the second question is regarding LED -- the LED initiative. When should we see the revenues accounted on Bolsa? And could you give us any color on the amount that you expect of revenues from this new initiative? And the other is regarding the discount plan. Did you feel having lower fees on government products has been driving for stronger competition on the government products, such as debt? And how many new issuance do you expect in Bolsa due to these changes on the fees?

[José-Oriol Par, executive]

David, good morning. On your cost question, we're continuously looking for ways to optimize cost, to optimize our headcount, to optimize our infrastructure, our technology. So that's an effort we will continue for the future. And specifically, we'll be looking -- we're not having -- revenues are down so compensation will be down somewhat. So we're just going through all our expenses and see where we can -- we've had more provisions than we estimated for year-end or where we can continue to optimize. But we do not have, let me say, a headcount reduction plan or any such initiatives. It's more a continuation of just -- we're constantly revisiting and renegotiating with our suppliers to keep cost growth to a minimum.

On the LED initiative, we expect to start -- to go live on Q4 of this year. We do not have any numbers to share with you yet, we will do so as soon as we have them.

On the discount plan, I'm sorry, I didn't understand your question. Could you repeat it please?

[David Soto, analyst]

Yes, of course. Do you feel that lowering your fees for listing new government products such as debt, do you think this has increased the competition? Or do you have seen any stronger competition regarding these products? And how many new issuance regarding debt -- government debt, the U.S. debt on Bolsa?

[José-Oriol Par, executive]

We did not offer discounts on government products. We offer discounts on the maintenance for our listed products, and they vary -- the discount varies depending on the liquidity of the instruments. Let me say, the less liquid the instrument the less value add there is on the maintenance service. The more liquid the instrument the more value added. So we -- our fee reduction is progressive, or let me say, it's co-related to the liquidity of the instrument. The less liquid instruments got the bigger discounts, but it's not focused or directed or co-related to government products. This -- I don't think this will necessarily improve or increase the number of listings. People come to the exchange for financing and whether the -- that's the basic driver, not because of the big cost. It is going to be the interest rate on the product they're -- on the debt they're issuing. It's not the listing and maintenance cost that's the driver for a company's decision to issue debt or any other financing product in the exchange. So this is just the -- this initiative comes for the benefit of our customers. And regarding the pipeline, I'll pass it on to Oriol.

[Ramón Sarre, executive]

Okay. Regarding the pipeline for this year, the pipeline, at this moment, looks much lower for several factors and one of them -- well, first let me start with the debt, with [indiscernible]. On the debt side, we did see a very low activity during the first half of the year as we have seen some businessmen that are -- and talking in particular on the mid- and long-term debt. Some of the businessmen are on a wait-and-see mode because of uncertainty. However, I think that it is worth mentioning that in the month of May and June, we started to see a recovery. But so far, and you can see that, we did see that in the economy growth for the first quarter that was a contraction, and second quarter, we do not have numbers, but it's not going to be very positive yet. But hopefully, we are going to see a recovery as we did see in the past 2 months. And hopefully, we start to see some of those; initiatives, expansion plans, et cetera, that are financed with mid- and long-term debt that through the exchange started in the next month.

On the equity side, the Bolsa is having a really bad performance this year. And talking about the Mexican Bolsa index, the IPC. The IPC this year is 3% up during these 6 months. But I think that this is -- at some point this is -- it is even worse than the last year. Last year, the Bolsa dropped 15% or 16%, but it was in line with all the global markets. However, this year, the Bolsa is 3% up, but all the other global markets are -- in the U.S., in Europe, in Asia, 15%, 20% up. So the Mexican Bolsa is lagging all the markets and I think that this is not good for attracting new IPOs. And as Oriol has mentioned at the beginning, the interest rate level are not helping either. So hopefully, with a couple of factors, less uncertainty, more confidence, recovering the economy and lower interest rates. I think that this would be a much better scenario for a pipeline and for new companies coming to the market. But at the moment, what we have seen and where we are seeing interest in the next month is more in ultimate products such as CKDs and CERPIs this was the case in the first half of the year. We also -- we are also seeing, on the public side, interest for one SPAC for a follow on and a couple of things. But I would say that so far the pipeline is very full.

[David Soto, analyst]

Okay. Perfect. Just a follow-up question regarding on cost. Do you expect to use any cloud services for your servers for improving your cost? Or do you expect anything regarding your services?

[José-Oriol Par, executive]

It's one of the options we're considering, whether what cloud services we can use. We already have some services on the cloud, but it's definitely one of the options we have? Specifically, I would say, our -- we have a new ERP system and that's on the cloud.

[Operator]

The next question comes from Mohammed Ahmad from FGP.

[Mohammed Ahmad, analyst]

Just on the other exchanges' revenue share. If you could give me some color on what kind of revenue share in Q2 that the competing exchange achieved in 3 separate areas. If you could tell me cash equity trading, listing in government debt and listing in nongovernment debt, just from a revenue share perspective, if you have those numbers?

[Ramón Sarre, executive]

Okay. Let me give you some numbers. In terms of market share, in cash equity trading, and the first quarter -- by the way the first quarter numbers and second quarter are pretty similar, so I will give you the first half of the year combined results. But -- and I think that the -- first, it is important to mention that the market is not growing. The story that we heard that the traded volume was going to increase because of -- by 50% because of a new exchange and that they were going to bring 50 new companies, et cetera. I think that we were all convinced. But I think that after one year that BIVA started operations, I think that now we know that this -- unfortunately that this is not going to be the case. So we are talking about the same pie that now we are sharing with a new competitor. In -- on total -- on the daily traded volume in Mexico, the [indiscernible] is MXN 15 billion per day. And the market share that BIVA has been gaining, I need to state at this level, it's 7% of the market share from Bolsa. And let me do some math here.

If we are talking about 7% of MXN 15 billion per day, we're talking about MXN 1 billion that is the traded volume that BIVA has on average on a daily basis. If we translate that into revenues, the Bolsa's in Mexico make or chart around MXN 30 per million traded on each side. So -- and that's for the buyer and the server, so both sides pay. So this is -- this will be for BIVA, let's say, for BIVA or the market share that we are losing. This is MXN 60,000 per day in revenues that they are making or that we are losing. And as mentioned, it's not growing. So we think that this is going to stay at this level. MXN 60,000, that's about $3,000 a day equivalent. If we look at the monthly numbers, that's MXN 1.2 million, or around $60,000 a month. And if we look at the annual numbers, this would be MXN 14.4 million or $720,000 a year. So Bolsa -- that means that in terms of revenues, we are not making MXN 14.4 million a year because of the market share that we are losing with BIVA. And obviously, we do not like that and we are not happy at all. But for the Bolsa, that Bolsa makes around 3.5 -- that was the case last year, around MXN 3.5 billion a year. So MXN 14.4 million a year out of MXN 3.5 billion, that's around 0.4%. That's it. So we're talking, and I think that it's interesting to mention that and more information regarding the market share.

I mentioned that BIVA has 7% market share. In the local market that, as you know, we have 150 listed companies, Mexican companies, that by the way, all of them, 100% of those 150 companies, all local companies, are listed in Bolsa not in BIVA. But in these markets, in the local market, our market share is 98%. So BIVA, they have 2%. And this -- and on the global market or the SIC, we have 90%. They have then the remaining balance, 10%; and on the total or consolidate market, local plus global, we have 93% and they have the 7% that I mentioned.

[Mohammed Ahmad, analyst]

Sorry, if I may just interject -- if I may interject just quickly. I understand that it's 7% volume and I understand that it's not big in grand scheme of things. There were 2 things I wish I would understand, one was the direction of the pure gain, which you already clarified that it seems to be stabilizing. And the other was that, my understanding is that 7% volume share doesn't actually translate into 7% revenue share because they have a much larger share of cross trades, which generates much lower revenue per volume of trade. So wouldn't their actual revenue be substantially lower than what you just calculated?

[José-Oriol Par, executive]

No, because whether it's a cross trade or not, does not impact trading fees, and they only have trading. So it could -- the difference would be that if it's a cross trade you pay the trading fee but you do not pay the clearing fee. BIVA does not have clearing services.

[Mohammed Ahmad, analyst]

Okay. That's good. I could just -- thank you for clarifying that.

[Ramón Sarre, executive]

And one final comment regarding the market share, that I think that is also interesting. The best execution regulation only works for the local market and the local market is where we have 98% market share for those 150 companies that are traded. The best execution does not work for the 2,000 values that are listed in the SIC. The trades that are executed in the SIC are directed by the broker-dealer or by the final client. It is just an instruction to trade in one or the other exchange. And what we have heard is that there are a few institutional investors that are directing some of those global market or SIC rates into BIVA. But the important thing here is that, in the best execution market we have 98%. That means that our technology is highly or extremely competitive because the automated trades are directing the trades to the Bolsa, not to the BIVA. And I think that this is also important to mention on the market share.

[Mohammed Ahmad, analyst]

And just on the debt side, corporate and government listing fees?

[Ramón Sarre, executive]

Yes.

[José-Oriol Par, executive]

On the -- on short-term debt, on these first 6 months of the year, we have had 579 listings, BIVA has had 3. On medium- and long-term debt, we have had 52 listings, BIVA has had 11.

[Mohammed Ahmad, analyst]

Okay. And would that largely correspond into revenue share as well?

[José-Oriol Par, executive]

Well, this will translate into revenue share for the -- for future maintenance fees.

[Mohammed Ahmad, analyst]

Okay. And just outlook for personnel cost and other costs, both of those were up sequentially. I'm just wanting to know if they should be stabilizing at these levels sequentially? Or should we expect them to continue to grow? I think personnel costs were up about 4% quarter-over-quarter so -- versus Q1 and then other costs were up 20%.

[José-Oriol Par, executive]

No. They should not continue to increase.

[Mohammed Ahmad, analyst]

Okay. Should we expect them to fall or stabilize?

[José-Oriol Par, executive]

We're working on them to reduce them somewhat, but we can't promise you a reduction. Definitely not in the [ equation ].

[Operator]

The next question comes from Gilberto Garcia from Barclays.

[Gilberto Garcia, analyst]

I have a follow-up on the market share number that you had been discussing. Given that BIVA apparently has a much smaller number of trades but at a higher value. And what you mentioned that perhaps some specific investors are specifically directing their trades to BIVA. Do you intend, at some point, to maybe make more targeted discounts to try to bring some of those block trades to Bolsa?

[José-Oriol Par, executive]

Gilberto, no. We cannot have a fee schedule directed at specific customers. Our fee schedule is for the market in general and the -- and has to be the same for everyone. So if we have one participant who, for whatever reason, is directing trades to BIVA, specifically crossing trades in the global market in BIVA, we cannot offer him special discount. To begin with, all the others would ask for that same discount and it -- the remedy may be worse than the expense.

[Ramón Sarre, executive]

And actually, we are not making -- if we have a discount or a different fee or a lower fee, this is not for the client. This is for the broker-dealer. So if we have -- if we reduce our fees, the fees are going to be reduced for all the 30 broker-dealers because of the Bolsa that we have in Mexico. But we do not know that -- and there is no way for us to make sure that this is going to go to the final client. This is going to depend on the broker-dealer. And this was the case of the SIC, but we make a very big effort in the past 2 years in reducing the fees that we are now seeing the success on the results. On the SIC, the fees from the SIC were reduced around 50% for the broker-dealers when we took this [ response to ] increased responsibility. But that didn't mean that the 50% discount was going to reach the final client. Actually, we heard broker-dealers that said, "Yes, I'm going to pass that to the client totally." Some of them they said, "I'm going to pass that partially." Some of them said, "I'm not going to pass that to the client because my expenses in the past 2 years had a really important increase because of the related cost to BIVA on connectivity surveillance, et cetera." And they did not pass that to the client. So it's not in our hands. If we make a discount or a lower price that this is going to reach the final client. Either an institutional investor or any kind of other client.

[Operator]

The next question comes from Manuel Gonzalez from Signum Research.

[Manuel Gonzalez;Signum Research, analyst]

Just one. I was wondering if you have some estimate or a period of time in which the derivative market could be developed and like, gain a little business? And on that regard, I was wondering how the government's cooperating and all that?

[Ramón Sarre, executive]

Yes. Well, we have been working during the year with authorities to have the participation in the Market Maker Program for M bonds and they can include their trading in M bonds futures too. And we have been working with the authorities to list new products, like the electricity futures, that we have been working for the last 2 years with them. We expect that we can list these electricity products in the last quarter of this year. And then we have been working with authorities too to list a new product, a repo TIIE, one-day TIIE futures. And we expect that we can list it may be 2 or 3 months, not a new reference interest rate against the TIIE. And we expect that at the end of this year we can have 2 or 3 new products, no? And we think that, for the first quarter of the next year, we can have a change in the Market Maker Program, no? In the M bonds Market Maker Program, no?

[Operator]

The next question comes from Oliver Leyland from Fiera Capital.

[Oliver Leyland;Fiera Capital, analyst]

I have a question on the impact of IFRS 16 on your margins. Could you just clarify the full year guidance pre- and post-IFRS 16? And quantify what was the impact in the first half?

[José-Oriol Par, executive]

Sure. The impact on the first half was MXN 57 million. So we would roughly double that. The impact on margin, we estimate to be about 3 points. So we moved our guidance from the beginning of the year, it was 53 to 56, and we updated it to 53 to 59 EBITDA margin. So that would be the impact we expect...

[Oliver Leyland;Fiera Capital, analyst]

56 to 59, right?

[José-Oriol Par, executive]

Yes.

[Operator]

The next question comes from Claudia Benavente from Santander.

[Claudia Benavente, analyst]

I have different question. I was wondering about Indeval. It has been growing nicely and you just mentioned that you're expecting more revenues from next year. So I was wondering, if we should expect that growth -- the current levels of growth to continue as far as how you've been serving looking forward? Or should we expect a stronger growth looking forward?

[Ramón Sarre, executive]

So we've seen a lot of growth much more related to the global market rather than the local market. And it's related to some additional services we have started providing since 2017 and some additional services that we have been adding. Looking forward, we -- as we briefly mentioned on the -- Oriol mentioned on the script, we will be developing and launching additional services by next year, and that has to go with this automation, information generation, a new access for foreign institutions that could come directly to Indeval. So we do foresee additional growth for next year at Indeval.

[Claudia Benavente, analyst]

But, for example, do you see growth, like, current level at 9%? Or maybe you can see the current level boosted?

[Ramón Sarre, executive]

So it will be for the next year certainly in the plan. In the next call, we will be developing or presenting more information on what is the expectations for next year, revenues specifically. But for this year, we believe that we would continue more or less on the trend that we have seen in this first semester.

[Operator]

At this moment we show no further questions. I would like to turn the call back to Mr. Güémez for final remarks.

[Ramón Sarre, executive]

Well, if there are no more questions, thanks, again, for participating, once again, in our quarter conference call. We appreciate your participation as well as all your questions. Thanks a lot. Have a great day, bye.

[Operator]

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.