Bolsa Mexicana de Valores SAB de CV

BMV:BOLSAA

Earnings Call Transcript 2022-Q4

[Operator]

Greetings, and welcome to the Bolsa Mexicana de Valores Fourth 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, Ramón Güémez, CFO for Bolsa Mexicana de Valores. Thank you. You may begin.

[Ramón Sarre, executive]

Thank you. Good morning, and welcome to Bolsa Mexicana de Valores Fourth 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 relating to future events 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 general, economic, political, 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 February 16 at Bolsa's corporate website, www.bmv.com.mx.

During this call, all figures are in Mexican pesos and compared to the fourth 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, CEO; Jose Manuel Allende, Chief Capital Information Markets and Information Services Officer; Roberto Gonzalez, Chief Post Trade Officer; Claudio Vivian, Chief Information Officer; Hugo Contreras, Chief Compliance and Regulation Officer; Alfredo Guillén, Managing Director Equity Markets; Jose Miguel de Dios, Managing Director of Derivatives Market; Gabriel Rodriguez, SIF ICAP CEO; Rosa Crespo, Managing Director of Human Resources; Luis René Ramón, Director of Investor Relations; and myself, Ramón Güéme, CFO.

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

[José-Oriol Par, executive]

Thank you, Ramón, and good morning, and thank you for joining us for the fourth quarter and full year 2022 earnings conference call. As for today's format, first, we will go over the financial highlights, and then we will focus on the main drivers of each business line. And finally, we will conclude with our project plan status.

So please let's get started in Slide #3 to review the fourth quarter financial highlights. In Slide #3, you can see the key financial highlights, and we have achieved a resilient results this quarter despite challenging market conditions and high comparison base due to onetime events registered last year. The revenue was MXN 973 million, down MXN 77 million. It is important to note that in 2021, we recorded nonrecurring revenue of MXN 70 million in Indeval and other revenue. Additionally, the number of cross-border transactions and settlements for the global market was down in Indeval. On the positive side, derivatives and OTC trading in Chile showed a strong performance during this period.

Expenses were MXN 458 million, up MXN 50 million. Last year's comparison base was low due to a lower personnel expenses, mainly variable compensation as well as consulting fees. After adjusting 2021 personnel cost to the ongoing rate, expenses were up only 6% in the quarter. EBITDA and net income reached MXN 568 million and MXN 379 million, respectively.

As for the full year 2022 financial results, please turn now to Slide #4. BMV's group diversified business portfolio continues to make sound financial and operational progress. Once again, I am glad to share with you that in 2022, we have reported all-time high in revenue, operating income, EBITDA and net income. Revenue was up MXN 175 million or MXN 4.5 billion to MXN 4.1 billion, MXN 41 million more from recurring operations, mainly in information services, derivatives and OTC trading and MXN 134 million from extraordinary concept in Indeval and SIF ICAP. Expenses were up MXN 69 million or only 3.9% to MXN 1.8 billion for the full year, maintaining our cost discipline as BMV Group continues its technology transformation.

EBITDA was up 4% to MXN 2.5 billion, and EBITDA margin was recorded at 61%, a similar figure to 2021. Earnings per share were MXN 2.87, up 6% from MXN 2.72 per share. All in all, BMV Group has delivered solid full year results with good underlying performance in transactional businesses and information services.

Please go to Slide #5, revenue by business line 2022. Our operations are well diversified across the value chain with highly recurring revenue in nature and strong customer retention. Transactional businesses which consists of equity trading and clearing, derivatives trading and clearing and OTC trading were up 3%, 17% and 15%, respectively. Information Services, which is made up of data, analytics, indices, valuation and financial risk management services is up 10%, driven by better understanding of customer needs and development of new products and services.

The central securities depository is in line with last year's figure. Capital formation is down 1% due to fewer liftings in 2021 and other revenue is down 11% due to the cancellation of provisions in fourth quarter 2021. So in total, BMV Group growth for the first time the MXN 4 billion mark to MXN 4.1 billion in annual revenue, growing 4.5% year-over-year.

On Slide #6, on equity trading and clearing. Cash equity trading revenue was down MXN 8 million versus the third quarter of 2021 to MXN 68 million and the average daily traded value, ADTV at BMV decreased by 8% at MXN 14.7 billion. During the period, the demand for the local market was stronger growing 6%, while the value traded for the global market decreased by 22%.

The latest regulatory changes regarding the best execution rule, or the way we see it, the forced allocation of trades was implemented in August 2022. Due to these changes, BMV Group decreased its market share to 83% in the fourth quarter, 87% (sic) [86%] in the local market and 78% in the global market. As for the full year, BMV's market share was 88% compared to 92% last year. 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 revenue was in line with fourth quarter 2021, even though the ADTV for the total Mexican equity market was 3% higher. This is explained by a larger number of cross rates in the period, which only require to be registered.

On the Slide #7, derivatives and trading clearing. The revenue in MexDer and Asigna was up 43% and 27%, 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 1.6 million contracts, 100% more than in 2021. Also, the notional value amounted to $358 million, the highest since 2014. The average margin deposits were MXN 36 billion in the fourth quarter, up 17%, mainly due to the higher trading of dollar futures with institutional clients and longer tenor swaps. Average margin deposits for the full year are up 2% to MXN 34 billion, in line with our expectations because of the new risk management methodology released in February 2022, which allows collateral and capital optimization. We are searching for new ways to grow the derivatives market in Mexico. MexDer continues in the authorization process to list options and futures of shadow listed foreign securities in Mexico given the success of the global market or SIC.

On Slide #8, regarding the OTC trading, SIF ICAP revenue was MXN 23 million or 15% higher compared to the fourth quarter of 2021. SIF ICAP Mexico was down MXN 1 million due to lower volume traded from clients. On the other hand, SIF ICAP Chile was MXN 24 million due to higher volatility and robust trading activity because of interest rate adjustment due to inflation expectations. For the full year, SIF ICAP revenue increased MXN 96 million out of which MXN 37 million are the result of non-recurring tax refunds in Chile. The VAT refunds have no impact on personnel expenses.

On Slide #9, on capital formation. The listing revenue reached MXN 24 million, 5% up versus the first quarter of 2021. In the debt market, 272 short-term debt issues were placed for an amount of MXN 49 billion. That's 28% higher versus fourth quarter of 2021 and 24 long-term issues for an amount of MXN 82 billion, 38% higher versus fourth quarter 2021. And for the full year, the amount placed in long-term debt increased 53% year-over-year. And it is important to point out that the trend in the outstanding balance has changed and growing once again.

As you may recall, over the last 4 years, the reduction increased and low activity because of the pandemic had a strong impact on this business line. Moreover, 44% of the total long-term debt issued in BMV during 2022 is sustainable through thematic green, social, sustainable and blue bonds and sustainability-linked bonds.

We will continue promoting this market for our digital platforms and education programs as we contribute to a sustainable economic development.

Regarding the equity market, one follow-on stands out in 2022. Fibra Monterrey for MXN 3.5 billion related to the demand for industrial space in the northern part of Mexico. Maintenance fees were down MXN 3 million in the quarter and MXN 10 million for the full year due to lower listings in 2021. Now the good news is that long-term debt listings are recovering and the trends in the outstanding balance has achieved. In this continue -- if this continues, we should expect a maintenance revenue growth starting 2024.

On Slide #10, on the Central Securities Depository, Indeval's revenue was MXN 279 million, down MXN 74 million. Last year, during the fourth quarter, we registered nonrecurring revenue for MXN 50 million due to the prescription of liabilities. Not considering this extraordinary contract, revenue decreased by MXN 24 million, mainly explained by a lower number of cross-border as well as lower average value of assets under custody in the global market.

The market correction in the U.S. and Europe has had a negative impact in the value of the global assets under custody, down 11% to MXN 1.5 trillion. However, the value of assets under custody in local market increased 3% to MXN 30 billion, mainly due to government debt. It is relevant to mention that the Indeval received authorization from the U.S. Internal Revenue Service to operate as qualified intermediary. During 2023, we expect to have a lower sub-custody expense because we will control the tax withholding process for American securities listed in the global market and it will bring several operational efficiencies to our clients.

On Slide #11, in Information Services. Information Services reported revenues of MXN 170 million in the fourth quarter of 2022, down MXN 3 million due to last year's one-time licensing sale of our portfolio management so far in a partially offset by new international clients and data for retail accounts. For 2022, revenue increased 10% to MXN 692 million. The continued acceleration in revenue reflects our investment in broadening and deepening our data and analytics offering. We expect information services to continue growing at double-digit rate given the demand for our data locally and internationally. And for the revenue, it decreased MXN 19 million year-over-year due to the cancellation of provision during the last quarter of last year.

Now let's look at our operating expenses in Slide #12. Operating expenses in the fourth quarter of 2021 were a typical due to low personnel expenses and nonrecurring consulting fees. After adjusting for these 2 term items, expenses in the fourth quarter of 2022 increased 6% versus the 12% showed in the report. As for the full year, expenses were up only 3.9% to MXN 1.8 billion.

Personnel expenses, up MXN 34 million in 2022, MXN 20 million because of lower variable compensation in 2021 and MXN 14 million due to increased wages and higher revenue in FICA.

Technology, up MXN 30 million, MXN 9 million more due to a reclassification of consulting fees to technologies related to hardware management services and MXN 21 million due to new licenses, consulting fees, cloud services and lease extensions to maximize the useful life of our hardwood.

Depreciation was down MXN 13 million. We have finished amortizing 2 platforms, the main trading engine and surveillance software as well as extending some hardware leases.

Rent maintenance up MXN 12 million because of higher maintenance costs and building renovation.

Consulting fees up MXN 1 million, MXN 10 million more in information security services, VAT refunds in Chile and the segregation of cost rates infrastructure and MXN 9 million less due to a reclassification of concept to technology mentioned earlier.

Sub-custody down MXN 4 million (sic) [ MXN 3 ] million due to lower costs associated with the administration of tax forms and W8 formats. We expect savings to continue in 2023 since Indeval has been authorized as a qualified intermediary.

CNBV fees, as you know, are linked to inflation are up 7.4%.

Other increased MXN 9 million because of events and promotional activities as well as a reserve for uncollectible accounts. Even though Mexico together with 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 custody CCP for bonds and accepting securities as merging deposits, continue pending regulatory approval. We have discussed our projects with the new financial authorities and showed them the benefit that direct project will be bring to the whole Mexican financial markets.

Also, together with the brokerage house association [indiscernible] and regulators, we are currently working to introduce several changes to the securities market law with the aim of developing a more efficient, agile and secure market.

Post-trade segregation is on track to separate the technology infrastructure for Indeval, Asigna and CCV. We have received all the hardware needed for this project which you will see as a MXN 10 million depreciation expense per quarter for the next 5 years. This initiative is part of our efforts to continue enhancing our resilience for all market infrastructure as well as compliance with the regulations.

Regarding historical market, we continue performing 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 a very large amount of data with the goal of attracting quants and algo-trading. Data is inside that drives trading, and those trades generate new data and so on. It is [indiscernible].

Turning to Slide 14. In 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 transition towards sustainable development. This year, BMV Group was included in the S&P sustainability year of 2023.

As a recognition to the progress, the company has made in implementing and promoting ESG standards in both developing and sustainable financial market and implementing several initiatives within the company. Over 7,800 companies were evaluated worldwide and only 708, out of those 14 are Mexican companies, including the Mexican Stock Exchange.

Regarding BMV's technology transformation, we are strengthening our platforms with the aim of having an evergreen and seamless technology across all divisions. We have started boosting our monitoring capabilities to track and evaluate the quality of the services being delivered as well as allowing a more proactive approach to correct animal functions before they occur.

Additionally, we are analyzing updating BMV's communication platform between issuer, the Mexican Stock Exchange and the market with the goal of automatizing processes, minimizing operational risk and manual repetitive tasks. Updating this platform, we will provide a better user experience to our clients.

Furthermore, we have started a design study with a third-party market infrastructure to analyze gaps and evaluate the need of upgrading our post-trade platform to enhance our product offering and simplify our operations. There is still a lot of uncertainty in the markets about the current macro environment, including many variables like inflation rates and recession risks to name a few. Given that uncertainty, BMV Group is ready and well-positioned to navigate an environment like this. The combination of our strategy and our business model makes Bolsa a very compelling option. By, first, diversified and recurring revenue; second, a strong customer rotation; third, investing for further growth and building a more agile organization and fourth, a strong cash flow and balance sheet light business model.

With that, I thank you for your time, and together with my colleagues, we will gladly answer any questions you may have.

[Operator]

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

[Ernesto María Gabilondo Márquez, analyst]

I have 3 questions from my side. The first one is on the potential regulatory changes to the Mexican securities law. And also implications of the new pension reform on the authors that is implying a higher workers' contribution from 2023 to 2030. So just wondering how these 2 positive regulations could translate into higher revenues for Bolsa. I think it will be gradual, but it's something that could be very positive in the medium term. So I would like to hear your thoughts on this.

And then my second question is on your expectations for maintenance fees in '23. As you were mentioning in your presentation, there were -- there was a better activity in debt issuances in 2022. So after contractions in the last 3 years in this line, are you expecting an inflection point, would it be reasonable to expect around single-digit growth for this line in 2023?

And then my last question is on how do you think the resharing thing could be translating into higher debt issuances or potential listings for the Mexican exchange.

[José-Oriol Par, executive]

Ernesto, thank you very much for attending and for the questions. The first one regarding the changes in the -- late in Mexicana de Valores. We are still working on that. It has been delayed. That's -- as you know, we were expecting that to be released by the end of last year.

So it's taking more time than we wanted. However, on the positive side, I think that the good news is that the scope of the original project has been increased. So now we are working in more than the 3 topics that we were initially looking. So the first one was the Mexican 144A that was probably the most important that we're looking at.

So now we are working with the different participants, in particular, with the brokerage houses and the scope now is much wider. The promise that if it is much wider, it can take more time, and the risk on this side is that this, as you know, requires a change in law. Therefore, it has to go to the Congress and going to the Congress as the time pulls by the changes could be a bit lower of this being approved in particular if we approach to a political year. So Hopefully, we will have better news in the short term. We'll continue working on that.

On the second part of the first question regarding the pension funds, as you know, this is going to be a big benefit as the contribution for the Mexican pension funds for the Afores are going to increase in the next 7 years. However, this has just started. It started a couple of days ago at the beginning of this year. So yes, definitely, I'm sure that we will see the benefit of this increase in the assets under management of the Afores. However, this is going to be a mid-long-term benefit. So I think that it is too early to call. Regarding the maintenance fees.

[Ramón Sarre, executive]

Regarding the maintenance fee, we think this year should be kind of flat, the good notice -- good news is that the trend has changed for the last 5 years. The listing activity and maintenance fee has been diminishing year-by-year.

But finally, this year is starting to go up. So for 2023, we think it will be flat. And may start growing a little bit for 2024 and so on.

And regarding near-shoring, we are positive. We have been talking with companies and especially with FIBRAS, which may be the first beneficial for that embedment coming into the Mexican border. FIBRAS for logistics, storage and industrial properties are now over 99% full. So any embedment in companies that may come to the border will be requiring this infrastructure. And the FIBRAS will be benefit, of course, for that. They will need capital and they will come on from -- for once or maybe we can see new names coming into the market. And if it happens also, other companies for construction and infrastructure and some other sectors may be well impacted, and we'll have opportunities to do investments there, and they will need financing. So the exchange will be an opportunity for them.

[Operator]

Our next question comes from the line of Rodolfo Ramos with Bradesco BBI.

[Rodolfo Ramos, analyst]

I also have 3 questions here, a brief ones. The first one is, you've been operating with the new rules, execution rules for a quarter. Just wondering if you expect market share to have stabilized already and that's what we should be expecting for this year? So that's the first one.

The second one is on the personnel expenses line. On the flip side, you do benefit from higher contributions more in the medium, long term, but just wanted to see what impact you're expecting this year in terms of personnel expenses in connection with all these policies that the government has been implementing, whether it's the higher pension payments, higher vacation days? I know if the wage, if you're seeing any pressure on the wage side, so that would be my second question.

And lastly, if you can remind us what your -- when you look at your revenue base and your different business lines, if you can remind us what kind of inflation indexation you have and perhaps like what kind of lag we can see this year in terms of revenues? We saw high levels of inflation last year. So just wanted to see how that will flow through this year in terms of your top line.

[José-Oriol Par, executive]

Rodolfo, thanks for the question. Regarding the best execution, as it was mentioned in the presentation, we have seen an evolution of that for the world. And as mentioned, the regulation that started as a best execution regulation a long time ago, it had some new changes as of August 2022.

And since then, it moved more from best execution to a forced distribution of orders by the Casas de Bolsa, and now after a couple of months, I would say that it is even worse than that. I think that this is a worst execution instead of a best execution, the idea of that was having value to the market. And I think that the effect has been the contrary. I think that we are seeing value destruction. And a way to prove that is that if we look at the trade volume between both exchanges before August 2022 and the traded volume for both exchanges after August 2022, it has been reduced. So we are now trading in between both exchanges less than we were trading in between both exchanges before the new change in the regulation.

And I think that the Casas de Bolsa, not some of them, all of them, will agree on that. And I think that they have been very vocal, and they have expressed -- formally expressed these concerns to the regulators. That's what we have heard. So definitely, there is a concern from the market participants from our clients are Casas de Bolsa and the clients of our clients, the final clients are pretty concerned on that because we are losing orders as it has been mentioned in other calls, there are some negative impacts.

As you know, if you send part of the order to one exchange, and you do not execute the order, then the order come backs to the other exchange and then maybe the price is -- has moved against the client. The costs are higher because of the rate of higher volume, lower fees. But now if you are splitting between 2 exchanges, maybe the fees that the Casas de Bolsa not maybe the fees that the Casas de Bolsa cash at boards are paying are higher, et cetera. But -- so I think that this has not been good for anyone. But I don't know if you -- if Alfredo, who is the head of Capital Markets, want to expand on that.

[Alfredo R. Lara, executive]

Yes, Rodolfo, just a quick note. There's good news in this situation. As discretionary trades, which are the cross orders are not subject to best execution. So we have been, since last year -- the end of last year, and as of yesterday, we have been seeing a gradual return to the Mexican Stock Exchange looking for liquidity and debt.

So we are expecting this pattern to continue during this year. So we have been regaining market share. So as Oriol said, passive orders are not compliant with best execution rules in other markets worldwide. So the Mexican broker situation is very vocal in changing those rules and apparently, things will change in the near future.

[Ramón Sarre, executive]

Rodolfo, regarding your second question on personnel expenses, fortunately, I think we have very good compensation package, especially in benefits in the exchange. So most of these reforms will not -- or new initiatives will not have a major impact here at the Bolsa. So the short answer would be we're expecting personnel expenses to increase in line with inflation.

[Unknown Executive]

Okay. And as for the third question about the inflation-linked revenues, I would say about 30% are linked, 25% our revenues are in dollars, especially on market data and the central security depository and then another 5% also in Indeval will be linked to inflation.

For the last 2 years, we used to have trading fees also linked to inflation. But for the last 2 years, they've been only linked to the best. There is a variable fee and then a fixed fee. But in total, it would be about 30%.

[Rodolfo Ramos, analyst]

You say 30% is inflation linked and 35 is dollar link?

[Unknown Executive]

Yes, probably around.

[Operator]

[Operator Instructions] Our next question comes from the line of Edson Murguia with SummaCap.

[Edson Murguia, analyst]

I have a couple of them. The first one is regarding being qualified intermediary [ status ] from the U.S. or the IOS. As I understand, this will give you for 2023 better cost expense between U.S. and Mexico, but would you give us a little bit more detail how exactly will work?

Because from our side, it's not clear exactly how you're going to tax holding and it's going to improve not only operationally the performance of the Mexican Stock Exchange, but broadly speaking, overall, the business [indiscernible].

The second question is regarding on trading hours. Because this year specifically, Mexico will not have daylight savings, looking ahead, what will be the new standards for operational because the differences will go on from 1 hour to 2 hours between the U.S. and the Mexican market?

[Unknown Executive]

Okay. Regarding QI, I think that those are very good news in general for the market and for Indeval. The first thing is the tax processing. And to give you an idea, last year, we processed about $550 million in dividends and distributions for Mexican clients that have securities outside within the global market.

From those if we didn't do anything, that would have requested a 30% withholding process or paid to the authorities. Because of the process that we have and we have about 22,000 active accounts, and we have 22,000 WH and the tire process goes are Indeval and also through the custodian in the U.S., it's much more complex. Becoming a QI allows now Indeval to have full control of the entire process, and we already have the license are using a system that allows us to get all the donates electronically. The forms will not go from starting this year to the custodian.

So it's much more efficient for the local brokers, for the local clients and for Indeval and that will also allow us to reduce the fees that we pay for the global custodian. To give you an idea, we expect about $1 million less in fees for this year just because of the insourcing of that process.

And in addition to that, right now, we go to the U.S. to reach DTC, to a custodian, now becoming a QI that would allow us to move to the next model that is account operator. And since we -- as soon as we informed the market that we were QI, we got proposal from the 5 -- largest 5 global custodians in the U.S. that are interested in providing those services to Indeval. So the intention is also this year to take the decision and maybe move the assets of Indeval from the custodian directly to our counter DTC and hire an account operator that would give us additional benefits operationally speaking and potentially additional savings. So that's more or less a summary of the QI process.

[Alfredo R. Lara, executive]

[indiscernible]. Regarding your question in terms of the hours we will be trading, as you know, more than 90% of trading volume comes from the U.S. So we will be changing trading hours. We will be starting at 7 a.m. with the pre-market auctions, then at 7:30, the regular market, that continues trading, and we will then trading at 2:00 p.m. So we definitely will move those the schedule -- the trading over schedule to comply with the U.S. So we will keep that in place as long as the U.S. keeps the daylight saving schedule.

[Edson Murguia, analyst]

Okay. My last as a follow-up on market share. Regarding on competition, I know it's difficult to give looking ahead, let's say, outlook. But regarding all the regulatory framework changes that you guys are working with the Mexican authorities and the other stock exchange are going. But regarding on the rate market access, if there is a chance of the possibility or is on the table change in the relator frame book, what would be the impact for the Mexican stock exchange. Have you -- let's say, put on in [indiscernible], have you analyzed that part of the business perhaps may have an impact on that part of changing?

[Alfredo R. Lara, executive]

No. It's on -- the DMA access will remain unchanged. At this point, it is not subject to best execution. So clients decide where to route their orders from the U.S. and other parts of the world. So we definitely don't see any changes in that sense. We only are foreseeing changes in the passive order rule, the 74 rule in the regulation. So rest assured that the DMA orders and algorithm trading once trading will remain the same.

[Operator]

Our next question comes from the line of Domingos Falavina with JPMorgan.

[Domingos Falavina, analyst]

I had some connection issues, so I'm not sure if you already addressed this. But my question was regarding financial expenses. It seems to have a little bit of a negative impact from exposure to U.S. dollar. I just wanted to like a more thorough explanation on that, like what exactly is the gross exposure to U.S. dollar? And how does that oscillate throughout the quarter? And how should we think about that hedging, unhedging and so on?

[Ramón Sarre, executive]

Domingos, good morning. We hold a long position in U.S. dollars, roughly $10 million. So on average, we generate -- our operations generate dollar plus we have the exposure in Chile. So whenever the peso appreciates, as it has over the past months, we generated an FX loss on that long position.

[Domingos Falavina, analyst]

Super clear. And Ramón, usually, that's stable at $10 million? Or it oscillates from like $5 million to $30 million or whatever throughout the quarter?

[Ramón Sarre, executive]

We try to keep it around $10 million. We try to keep a balance between our -- our assets are not -- the number of times our assets are larger than our liabilities. So it should be -- it oscillates leads between $10 million, $12 million, $13 million.

[Operator]

Our next question comes from the line of Andres Soto with Santander.

[Andres Soto, analyst]

My question is a follow-up regarding the expense growth for 2023. Do you have any target for EBITDA margin? Do you think it's going to be more similar to the full year 2022, which was at 61% or it's going to be more like the fourth quarter at 58%? And more generally speaking, if you can give us what is your outlook for expense growth this year?

[Ramón Sarre, executive]

Andres, thank you very much for your question. We are not currently giving any guidance for 2023 results. So I'm sorry, but we can't comment on our EBITDA expectations or margin expectations for the year.

[Andres Soto, analyst]

Understood. And in terms of expense growth, do you have any number in mind it's going to be in line with inflation or above inflation or below inflation?

[Ramón Sarre, executive]

I'm sorry. We can't give any specific guidance on that. My only comment would be that our goal is always to increase margins even if it's by a little bit. We're looking at a lot of technology expenses for next year, or I'd say, for this year. So we have a lot of investments planned for our projects for the post-trade segregation specifically for upgrading our technology. But I'm sorry, but we can't -- I can't give you a more specific answer.

[Operator]

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

[José-Oriol Par, executive]

Okay. In the name of Bolsa, I would like to thank you to all of you for attending and participating in this fourth quarter conference call -- earnings conference call. So thank you very much once again. And have a great day. Thank you.

[Operator]

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