Bolsa Mexicana de Valores SAB de CV

BMV:BOLSAA

Earnings Call Transcript 2022-Q3

[Operator]

Greetings, and welcome to the Bolsa Mexicana de Valores Third Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Ramon Guemez, Chief Financial Officer for Bolsa Mexicana de Valores. Thank you. You may begin.

[Ramón Sarre, executive]

Good morning, and welcome to Bolsa Mexicana de Valores Third Quarter 2022 Earnings Conference Call. Before proceeding, I'd 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 the current views of Bolsa related to future events and are subject to risks, 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 the general economic, political and governmental and business conditions, both in a global scale and in the individual countries in which Bolsa does business, such as changes in monetary policies and 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 October 21 at Bolsa's corporate website www.bmv.com.mx.

During this call, all figures are in Mexican pesos and compared to the third quarter of 2021, 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; Jose Manuel Allende, Chief Capital Formation Markets and Information Services Officer; Claudio Vivian, Chief Information Officer, Hugo Contreras, Chief Compliance and Regulation Officer; Alfredo Guillén, Managing Director of Equity Markets; Jose Miguel de Dios, Managing Director of Derivatives Market; Rosa Crespo, Managing Director of Human Resources; Luis René Ramón, Director of Investor Relations; and myself, Ramon Guemez.

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

[José-Oriol Par, executive]

Thank you, Ramon. Good morning, and thank you for joining us for the third quarter 2022 earnings conference call. In terms of today's format, I will go over the financial and operational results of each business line, talk about our progress in BMV's project plan and then open the line for Q&A. If you want to ask a question, please dial in the number that was provided in the press release yesterday.

So let's get started in Slide 3 to review the financial highlights, please. So we have achieved solid results this quarter despite challenging market conditions with revenue growth and cost control. Revenue was MXN 979 million, up MXN 52 million or 6% compared to the third quarter of 2021, driven by a stronger performance in transactional businesses in derivatives and OTC trading and information services. Expenses were MXN 462 million, up MXN 17 million or 4%, well below inflation and under control, mainly explained by technology, consulting fees and building renovation expenses. Operating income and EBITDA increased at 7% and 6%, respectively, and net income reached MXN 400 million for the quarter, showing a 9% growth compared to the third quarter of 2021.

As for the financial results for the first 9 months of the year, please turn to Slide #4. BMV's group diversified business portfolio continues to make sound financial and operational progress. Revenue is up MXN 252 million or 9%, MXN 115 million from recurring operations and MXN 134 million from extraordinary concept in, in the [indiscernible]. Expenses are up only MXN 18 million or 1% for the first 9 months of the year. EBITDA is up 13% to MXN 1.9 billion, and EBITDA margin was recorded at 62%. A further improvement on our 2021 performance, and we have done this while continuing to invest in our business. Earnings per share are MXN 2.21 up 18% from MXN 1.86 per share. All in all, BMV Group has delivered a solid quarter and 9-month results with good underlying performance across most divisions.

If you go to Slide 5, regarding the revenue by business line for the first 9 months of 2022, our operations are well-diversified across the value chain with highly recurring revenue in nature and strong costumer retention. Transactional businesses, which consist of equity trading and clearing, derivatives trading and clearing and OTC trading were up 5%, 12% and 15%, respectively. Once you exclude nonrecurring tax refunds in SIF ICAP Chile, OTC was up 7%. Information services, which is made up of data, analytics, indices, valuation and financial risk management services is up 14%, driven by better understanding of customer needs and development of new products and services. The central securities depository is up 8%. However, down 3% after excluding extraordinary items in first quarter 2022, and capital formation is flattish, down 1% due to fewer listings last year. All in all, BMV Group total revenue is up 9% in the first 3 quarters of the year. In the next slides, I will give you more color about each business line.

So if you can turn to Slide #6 starting with equity trading and clearing. Cash equities trading revenue was flat versus the third quarter of 2021 at MXN 74 million while the average daily traded value, the ADTV was up 4% at MXN 15.9 billion. The difference between the growth rate in the ADTV and revenue is due to the cancellation of services of three brokerage houses, UBS, Evercore and Deutsche. The local market ADTV increased 1% and represented 47% of the total value traded at BMV and the global market ADTV was up 6% and amounted to 53% of the total value traded at BMV. We continue witnessing a strong appetite for BMV SIC or global market. The latest regulatory changes regarding the best execution rule or the way we see it at for allocation of trades was implemented in August of this year. Due to these changes, BMV Group decreased its market share to 87% in the third quarter of 2022, 92% in the local market and 83% in the global market. These changes will not have a material impact in our top line. However, we expect them to have a negative influence in the Mexican financial markets.

As for the equity clearing house, CCV's revenue was in line with third quarter 2021, even though the ADTV for the total Mexican equity market was 11% higher. This is explained by a larger number of post-trades in the period, which only require to be registered.

On next slide, on Slide #7. Regarding the derivatives trading and clearing, the revenue in MexDer and Asigna was up 10% and 25% respectively, due to higher trading of dollar futures and longer tenor traded of tier swaps. The open interest of dollar future is at a historic record high at 1.4 million contracts, 3x more than in 2021. The average margin deposits were MXN 37 billion in the third quarter up 23%, mainly because of higher trading of dollar future with institutional clients and longer tenor swaps. Average margin deposits for the first 9 months of the year are down 3% to MXN 33.4 billion, in line with our expectations and as a result of the new risk management methodology released in February 2022, which allows collateral and capital optimization. We continue searching for new ways to grow the derivatives market in Mexico. MexDer is in the authorization process to list options and futures of shadow listed foreign securities in Mexico given the success of the global markets or SIC.

On Slide #8 on the OTC trading business, SIF ICAP revenue was up MXN 15 million or 9% higher compared to the third quarter of 2021. SIF ICAP Mexico was down MXN 2 million due to lower volume traded from foreign clients. And on the other hand, SIF ICAP Chile was up MXN 17 million due to volatility and robust trading activity because of political and economic events. In the period up to September, SIF ICAP revenue increased MXN 73 million out of which MXN 37 million are the result of nonrecurring tax refunds in Chile. The VAT refunds have no impact on personnel expenses.

On Slide 9, on the capital formation, the listing revenue reached MXN 15 million, flat versus the third quarter of 2021. In the equity market, one follow-on stands out Fibra Monterrey for MXN 3.5 billion. Regarding the debt market, 241 short-term debt issues were placed for an amount of MXN 46 billion, 1% lower versus the third quarter of 2021 and 20 long-term issues for an amount of MXN 53 billion, 71% higher versus the third quarter of 2021. Moreover, three clients listed ESG debt through BMV, two social bonds from Compartamos Banco for MXN 2.5 billion and for [indiscernible] for MXN 4 billion, as well as a sustainable bond from the State of Mexico for MXN 2.9 billion.

Today, ESG debt security represent 25% of the total long-term debt issued in 2022. This figure shows the importance of sustainability in today's Mexican financial market. BMV Group will continue promoting sustainable practices from two fronts. First, within our organization by leaving with example and second, encouraging our stakeholders to adopt ESG at their core as well as developing the necessary products and services to comply with the market's needs. Maintenance fees were down MXN 1 million due to lower listings in 2021. And we expect annual revenue in this business line to be slightly below last year's figure. As debt listings slowly recover, we will see growth in maintenance revenue in the following years.

On Slide #10, on the Central Securities Depository, Indeval's revenue were MXN 289 million, up MXN 3 million or 1%. Services related to the global market grew by MXN 2 million and assets under custody by MXN 1 million. The market correction in the U.S. and Europe has had a negative impact in the value of the global assets under custody, down 4% to MXN 1.6 trillion. However, the value of the assets under cost to be in local market increased 2% to MXN 29 trillion due to government debt. It is important to mention that Indeval is in the process to become a qualified intermediary under the IRS in the United States. This will bring several operational efficiencies to our clients and lower our custody expenses in 2023.

On Slide 11, on Information Services. Information Services reported revenues of MXN 178 million in the third quarter of 2022, up MXN 24 million or 15%, mainly driven by new business growth and high customer retention. Continued acceleration in revenue reflects our investment in broadening and deepening our data and analytics offering. Market data revenue increased 17% due to sales with new international clients, growth in the number of terminals for retail investors, new services and reference data product and fee increments. Valmer is up 12% due to the implementation of a portfolio management software, which including consulting expenses and valuation services. So the acceleration reflects the improvement we have delivered in sales, new products and services.

Now let's look at our operating expenses in Slide #12. The operating expenses were well under control, up 4% in the third quarter and only 1% for the months up to September. Personnel expenses down MXN 10 million. This is the net effect of the extraordinary expenses due to a corporate restructuring in SIF ICAP last year and higher expenses because of salary increments and higher revenue in SIF ICAP. Technology, up MXN 15 million due to software licenses for cybersecurity and cloud services. Additionally, some IT hard work has been extended to maximize the useful life of the equipment, which increases our technology expense line and decreases depreciation. Rent maintenance, up MXN 8 million because of higher maintenance costs and building renovation. Consulting fees up MXN 13 million because of information security services, [ free ] IT refunds in Chile and the segregation of post trade infrastructure. Custody down MXN 4 million due to lower costs associated with the administration of tax forms and WA formats. CNBV fees are linked to the inflation of MXN 1 million. Even though most countries in the world are experiencing high inflation, we continue executing with cost discipline towards increased operational leverage while investing for growth.

Please turn to Slide 13 to review the status of our project plan. As Slide 13 shows direct court, CCV 4 bonds and accepting securities or merging deposit, continues pending regulatory approval. There has been turnover at the financial authorities office, and we hope it is a breath of fresh air to discuss our projects and the benefits they will bring to the whole Mexican financial market. Post-trade infrastructure segregation is on track to separate the technology infrastructure for Indeval, Asigna and CCV. This initiative is part of our effort to continue enhancing our resilience for all market infrastructure. We will start registering hardwood leases as depreciation in fourth quarter and we are reviewing open source licenses and performing the risk sizing to minimize added cost.

Regarding historical market data, we are a bit behind the schedule, currently testing connections and performing internal trials. As you may know, we are working with a global third-party provider to deliver agile and high-precision data to perform in-depth analysis, back testing of very large amount of data with the goal of attracting [ coins ] and algo trading. Data is the insight that drive trading and those trades generate new data and so on. It is a virtuous cycle. Last but not least, we are on track on the minimum viable product for securities lending. By the end of the year, our clients will be able to negotiate transactions and keep record in an easier and user-friendly manner.

On Slide 14, as a summary, I would like to share with you a couple of highlights. As I have said before, the Mexican stock exchange is a vital institution that serves as an engine in the Mexican economy's transition towards sustainable development. This year, Bolsa was included in the local and regional ESG indices due to our efforts to run a sustainable company and promote environmental, social and governance practices across the market. We won the 2022 Social Responsibility Award by the [indiscernible] and finished second place in the gender equality context by the Mexican Institute of Financial Professionals and women in finance.

Furthermore, we have doubled down in our efforts to promote financial awareness in Mexico by releasing a mobile app targeted for the local retail investor which you may download under the name of Bolsa. This initiative is a joint effort and is being carried out by companies listed in the brokerage houses and fund managers. Each old BMV Group is investing in digital products as part of BMV's technological transformation. On that point, we are analyzing updating BMV's communication platform between issuers, the Mexican Stock Exchange and the market with the goal of automizing processes, minimizing operational risk and manual repetitive tasks. Updating this platform will provide a better user experience to our clients.

Furthermore, we are once again reviewing third-party market infrastructure and performing a benchmark analysis versus our post-trade platform with the aim of enhancing our product offering and simplifying our operations. There is a lot of uncertainty in the markets about the current macro environment, including inflation, rising rates and recession risk to name a few. Given that uncertainty, BMV Group is ready and well-positioned to navigate an environment like this. Our project plan is well-positioned in the key areas that are growing. Data analytics and post-trade services. The combination of our strategy and our business model makes Bolsa a very compelling option. Diversified and recurring revenues, a strong customer retention, investing for further growth and building a more agile organization and a strong cash flow and balance sheet light business model.

With that, I thank you for the time. And together with my colleagues, we will be -- we will gladly answer any questions you might have. Thank you very much.

[Operator]

[Operator Instructions] Our first question comes from the line of Ernesto Gabilondo with Bank of America.

[Ernesto María Gabilondo Márquez, analyst]

Hi, good morning, Oriol, Ramon and Rene. Good morning, everybody. I have three questions from my side. The first one is on cash trading revenues. In your press release, you mentioned that those were limited because three brokerage houses have closed. So you mentioned Evercore, UBS and Deutsche and also because of the implementation of the best execution. So can you break down how much was related to the closing of the brokerage houses and how much to the best execution implementation? Just to have an idea if it's half and half or something like that.

Then my second question is related also to the best execution, implementation and competition. We saw Viva return to the double-digit market share. So just wanted to hear from you, how do you see the implications for Bolsa's revenues in the next 12 months if Viva maintains some market share of what you saw in August, September, that was around 16%, 17%. Also related to this is it true that the migration of volumes from brokerage houses to Viva will allow Bolsa to start charging tariffs that before were not recognized because they were already above the upper limit?

And then for my final question is on your EBITDA margin. We saw it came below the 60%. So I just wanted to hear your thoughts if you think it could be again at the 60% level and what will be the drivers behind that?

[Unknown Executive]

[indiscernible] for Equity Markets. Regarding the best execution regulation, we have explained that it's more a forced distribution of orders or allocation of orders than the best execution of trades, which is not seen in other markets worldwide. So we believe clients will eventually realize that their orders could be optimized with a better regulation. So we expect our market share will stabilize in 82% next year as a whole for both markets. So that will approximately give us an impact of $1.5 million in revenue, cash market revenue, which is less than 1% of the total revenue of the group. So it's marginal at this point.

In terms of our -- the brackets of our table -- we believe that at some point, the distribution of orders or forced distribution of orders will not benefit the -- our brokers because they will change from one bracket to another. So the total cost of trading with this separation of orders will eventually make them realize that they should focus on the market that gives them more economies of scale and better costs in the trades. So basically, that's what we see in best execution regulation.

[Operator]

Our next question comes from the line of [indiscernible].

[Unknown Analyst]

I think there was a few questions before me that weren't answered, but I can continue.

[Unknown Executive]

Yes.

[Unknown Analyst]

So we have continued to see reports on a potential securities reform in Mexico. What we know so far from compiling different media reports in the proposal is to simplify the listing process and allow brokers to carry out some oversight responsibilities but also give greater protection for companies to maintain control. So from your perspective, what should the bill include and where can consensus be reached?

[Unknown Executive]

Thank you for your question. Maybe we were in the process of answering all the questions from Ernesto.

[Unknown Executive]

Then after this, if you'd like to ask your questions again, and we'll get it back to you. We'll just take one first.

[Unknown Analyst]

Okay.

[Unknown Executive]

Okay. Regarding the securities market project, we have been working closely with authorities and other market participants for some changes in the law. And I will say there are 4 or 5 main topics. The first one is to create a new listing segment, something similar to the 144A markets and international markets by which companies placing securities with institutional investors may be extended for some processes and requirements on the securities commission. And relying all those processes to the exchanges hoping to make this faster among [indiscernible] and processes.

The second, as you mentioned, is to allow companies to freely adopt the equity structure that they decide by allowing them to issue voting or nonvoting shares without any restriction but only to make it public to investors.

Third one should be related to the [indiscernible], this type of security by which -- by canceling some provisions by which the company has to adopt the transition to a [indiscernible]. It may be a permanent segment with lower listing and governance requirements. And for one, there are some technical changes to make easier the follow-on processes or secondary offers. So all these changes are aimed to help and improve the listing activity and to attract more companies to the market. Beside the idea on securities market law after those changes are implemented, which hopefully we will hope to get them on this year. The Securities Commission may have to address some changes on the secondary legislation in the [indiscernible], which hopefully will be by the early next year.

And I would add that I think that the message is quite positive. What we are seeing is that the Mexican financial authorities are concerned on the development or on the poor development of the Mexican exchange market. And they are aware of that, and they are willing to make changes, including some changes in the law, as Jose Manuel mentioned, to continue to develop the Mexican exchange market. So I think that is a good opportunity for all of us.

[Operator]

Mr. Gabilondo, please proceed with your questions.

[Ernesto María Gabilondo Márquez, analyst]

So I think that the one on our best execution was answered. So just wanted to hear from you we can have like the breakdown on how much was related to the closing of the brokerage houses and how much to the best execution implementation. And then the other question was on your EBITDA margin. We saw it came below the 60%. So I just wanted to hear if you think it could return to the 60% level in the next quarters. And what would be the drivers behind that?

[Unknown Executive]

Okay. Also, Ernesto, for the EBITDA margin, yes, it fell below. Hopefully, we'll be back closer to 60 or above for Q4, the driver would be any additional market activity, I think we had a lot of -- we have very good markets in the ball and assets under customers are not doing too good. So any recovery from the market would definitely help us. Regarding the difference, the 3 less broker challenges are costing us around MXN 1.5 million. And as for the difference in market share, how much that would be, that's difficult to that's difficult to say.

[Unknown Executive]

I think that this is difficult to answer and some of them are global institutions that could be trading from out of Mexico. And I think that to close Casas de Bolsa in Mexico was more a business decision. And actually, in some of the three names that we mentioned, I would say that was not just a local decision regarding Mexico, it was a decision regarding even the region, the Latin American region. So -- but on the other side, we all know that there are at least, as far as I know, two other broker dealers, Casas de Bolsa in Mexico that are looking for an authorization with financial authorities and probably are going to be trading soon. So I think that is a business decision that -- and we cannot isolate how much was the best execution and how much was the closing of this Casas de Bolsa.

And I will also add that the traded volume for the first 9 months of the year was higher than the traded volume for the 9 months of 2021. So I think that if we look at the number, there was at least no impact or maybe this is because of a bit higher volatility this year, I don't know. But -- and I think that what it is important for us is that the total traded volume in between Bolsa is -- and this was the idea, I think, of authorizing and giving a concession to a new exchange was that the traded volume, the total trade volume as well as the number of listed companies was going to increase. If this is the case, we are all going to be happy. If we have traded volume that once it is fragmented the total traded volume in between both Bolsas is lower than I think that is going to be a lose-lose situation for everybody.

[Operator]

Our next question comes from the line of Alonso Garcia with Credit Suisse.

[Ricardo Garcia, analyst]

Thank you for providing an update on the ongoing projects. Actually, my question is regarding those projects. I don't know if you can -- especially for the projects that are not waiting for regulatory approval, if you could provide any color on the potential impact you think those projects can have on your results? Especially historical market data and the MVP for securities lending in terms of the impact they can have on your revenue growth? And if there is any impact you can estimate on your OpEx line, from the infrastructure segregation that you also mentioned.

[Unknown Executive]

Thank you, Alonso. Regarding the historical market data for quant and high-frequency traders. Our goal is actually in a net situation where we want to provide data to make it more transparent, to give more confidence to the market, to finding efficiencies that will close the spreads, and that will attract new types of clients to our markets. As for the opportunity, the size of the opportunity, we believe that on data, it will help us support our double-digit growth for the coming years. And what we expect is that because of this data, we will have a higher value traded -- or that's what we're expecting higher value traded on the equity market. It's tough to say at this point. It will really depend on the back testing and the analysis that these clients will perform in the coming months. And we'll be reporting the results in Q1 and probably Q2 of next year.

[Ricardo Garcia, analyst]

And impact you can estimate on the OpEx line from the infrastructure segregation?

[Unknown Executive]

From segregation, you mentioned?

[Unknown Analyst]

Cost impact on the OpEx.

[Unknown Executive]

Yes. Sorry, on the segregation, starting Q4 we are receiving already all the hardware, which is leased and we will be depreciating. So the impact on that one is MXN 10 million per quarter. You will see this impact starting Q1 next year. You will see some impact in Q4 because we are receiving all this hardware, but you will really see the whole MXN 10 million on depreciation next year. On top of that, some licenses and some other consulting, but the material part of that project will definitely be on the hardware.

[Operator]

Our next question comes from the line of Jorge Henderson with Santander.

[Jorge Henderson Cubillas, analyst]

I have two questions. The first is regarding your capital allocation strategy. I wanted to ask you are considering any M&A in the future, especially -- or specifically around fintech companies, I don't know, around blockchain or retail trading, I don't know, you have anything new there? And second question is on expenses. What should we expect for expenses in the next quarter? I mean you mentioned this new hardware around segregation project. But I don't know if you have more detail on that and if you see reasonable to expect deterioration on efficiency in the next quarters, considering top line growth may remain moderate in the short term.

[Unknown Executive]

Thank you, Jorge. Regarding our capital structure, we are continuously looking for different M&A or inorganic growth opportunities. We haven't found one that specifically fits us but if you have any ideas, we're more than welcome to listen to them. Specifically, fintech, we have a regulation issue but we're definitely looking for new ways to grow. Regarding the expense expectations for next quarter, we're not expecting any major surprises we could -- we'll be definitely having a little more expenses, as Luis said, from this post trade segregation project. But it's nothing -- but no major surprises.

[Jorge Henderson Cubillas, analyst]

So we should expect -- continue to expect expenses growing below inflation?

[Unknown Executive]

At least for Q4, yes.

[Jorge Henderson Cubillas, analyst]

Okay. I just wanted to confirm a number I think you shared. Did you say that you expect information services to grow double digit for next years? Maybe I can -- just wanted to...

[Unknown Executive]

Double-digit. Yes. Yes, that's what we would expect.

[Operator]

Our next question comes from the line of [indiscernible] Capital.

[Unknown Analyst]

I want to -- the first one is a follow-up on Viva on the services that were canceled by some [indiscernible] dealers. Specifically, what type of services because it's my understanding that Deutsche resists running and looking for different type of approvals from Mexico. So I was trying to figure out what type of services will cancel. [indiscernible]. The second one, I was wondering if you can give us little bit more color about this new derivatives? And is this new type of options are going to be part of this conversation after the new regulation that we see undergoing?

[Unknown Executive]

[ Edson ] so we couldn't hear you very well. Could you repeat the first question?

[Unknown Analyst]

Yes. My first question is rather on the services that were canceled. Specifically, what type of services because it's my understanding that Deutsche securities is working and running.

[Unknown Executive]

So the first, if I understand correctly, your first question is regarding the three brokers that left Mexico? And the services they canceled?

[Unknown Analyst]

Yes. Because Deutsche Securities, it's not -- it's working.

[Unknown Executive]

They pay a membership fee and also infrastructure connection fees and so less brokers reduce our revenues in those concepts.

[Unknown Executive]

The [indiscernible] in Mexico, they have fixed and alliable cost on the fixed side. They were paying one membership fee, flat fee to all the Casas de Bolsa to the Mexican Bolsa. And this is part of the cost that have been increasing and that the Casas de Bolsa have been complaining because since 2018, they have been paying two memberships. So the fixed cost in this particular item, as an example, increased by 100% because now they are paying two memberships. So this increased the cost for the Casas de Bolsa and now those Casas de Bolsa what they are doing are reducing these fixed costs. So in this one, we will lose because the membership that they were paying to Viva and the Bolsa now going to go to 0. So this is part of the effect of increasing more the cost and the expenses than the benefit.

[Unknown Executive]

Okay. Okay. And about the authorization of the futures and options on the SIC equities on the SIC stocks, we have been waiting for a long time for the authorization. So on -- around 1 month ago, we received some requirements to do some changes in the specs. So we are working on these changes and we expect to send it in the next weeks to the authorities again. And maybe at the end of the year, we can receive the approval.

[Unknown Analyst]

Okay. And last, regarding on [indiscernible] liabilities, this quarter increased 32%. So looking forward to the end of 2022, this [indiscernible] liabilities are going to be in the same level? Or are you expecting because of the efficiencies that you're planning to do so getting onward?

[Unknown Executive]

Yes, we have -- as Oriol mentioned, we have a historical record in the open interest in the dollar futures. So we believe that next year, we are going to have growing the volumes in the dollar futures because we have very high open interest in dollar futures and in swaps.

[Operator]

Our next question comes from the line of Guilherme Grespan with JPMorgan. Mr. Grespan, your line is live.

[Guilherme Grespan, analyst]

My question is only -- it's actually a follow-up for the best execution rules. As you guys mentioned, the trading impact is very small. It's just a follow-up, if you see any spillover impact to other revenue streams, maybe data, clearing, even capital formation. So just to get a sense of how risky are those other lines for potential implications of the new execution rules.

[Unknown Executive]

Yes. I think that's a very good point. And again, let's [indiscernible] in the past, the traded volume was, let's say, 100 and today, the traded volume is 80 at the Bolsa and at 20 traded our competitor. Then we only have an impact that [indiscernible] already mentioned on the cash equity trading. However, if the total traded volume in between both exchanges is lower because of this increase in cost, expenses, et cetera, then the impact could be much higher than that because the impact of trading [indiscernible], let's say, [indiscernible] between both exchanges will have a negative impact, not just in the [indiscernible] business, but at the CCP, at our clearing house, at the [indiscernible] will have also an impact at the Indeval will also have an impact at the market data. So this -- I agree, and I shared this is the concern to -- and we have shared that with financial authorities. So what we have to do is to avoid the impact of the fragmentation and having an even smaller market -- exchange market in Mexico. So, so far, I think that it is contained, but hopefully, it's going to be -- is not going to be bigger than that. And all the impact that we are going to have they already mentioned around 1% current MXN 30 million, $1.5 million on the total revenue.

[Operator]

[Operator Instructions] Our next question comes from the line of Gilberto Garcia with Barclays.

[Gilberto Garcia, analyst]

A couple of follow-ups. You mentioned that the impact from the broker that sees operation was MXN 1.5 million. Is that the aggregate impact or per broker? And on expenses, you mentioned that for the fourth quarter, they should grow beyond inflation. I'm assuming that is excluding the nonrecurring items that you had in the fourth quarter of last year, right?

[Unknown Executive]

Gilberto, the MXN 1.5 million is the impact of the 3 brokers for the quarter. So you'd have time that for a full year impact. And could you repeat your second question, please?

[Gilberto Garcia, analyst]

Yes. You mentioned that expenses should grow below inflation at least in the fourth quarter of this year. Is that excluding or adjusting for the nonrecurring items that have a favorable impact on expenses in the fourth quarter of last year?

[Unknown Executive]

Yes.

[Gilberto Garcia, analyst]

Okay. And at this point, I mean, I know that you didn't provide the guidance for this year. But thinking about mix here, is it reasonable to expect expenses to continue to grow below inflation?

[Unknown Executive]

No.

[Gilberto Garcia, analyst]

Okay. Thank you.

[Unknown Executive]

Sorry for such short question, but I mean I could say the same thing over 10 minutes, but the short answer is just we don't think expenses will be growing below inflation, especially with the new projects we have and inflation will be a reality.

[Gilberto Garcia, analyst]

Right. No, no, no, that's fair. And obviously, it's been a rather strong execution over the past quarter given the inflationary environment. But I appreciate the consigned answer.

[Unknown Executive]

Now notwithstanding the shortness of the answer, we will, of course, continue with our efforts to control costs and mitigate group expense growth as much as we can. But yes -- but I don't see it as realistic that they will grow below inflation.

[Operator]

Our next question comes from the line of John Barnett with Barnett & Associates.

[Unknown Analyst]

I guess as a preamble, I'll try to be quick here. It seems to me that to quote Charles Munger, show me the incentive, and I'll show you the result in that the country of Mexico taxes, IPOs when capital is raised, I believe, 10% of the capital raise, which is a significant disincentive to go public, which means the pie here is not growing in the number of listed companies. And I was curious, do I understand this correctly? And what is it that Bolsa is doing to try and convince the government decision makers that this is a poor economic strategy for Mexico and that it's holding the country back and we can see the results?

[Unknown Executive]

Regarding tax issues for IPOs and companies coming to market. A couple of years ago, there was a decrease from the Ministry of Finance by which companies and main shareholders will be beneficiary of reduced 10% tax versus the 35% that is the common standard. That decrease is in place. So far, we're not having companies coming to market that may use that. We're keep on doing promotion efforts for companies to realize that this is a new alternative. And in the same time, we're talking to authorities in getting the idea that it will be good to get an additional benefit to take out this 10% and to move -- to remove it and just go into the 0 structure that we had some years ago. We're working on that and talking to authorities to push that forward.

[Operator]

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Oriol Bosch for any final comments.

[José-Oriol Par, executive]

Okay. Thank you very much to all of you for participating for your questions and your attendance. So thank you very much, and talk to you next quarter. Have a great day. Thank you. Bye.

[Operator]

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.