Bolsa Mexicana de Valores SAB de CV

BMV:BOLSAA

Earnings Call Analysis

BMV Sees Revenue Growth Despite Market Challenges

In Q4 2023, Bolsa Mexicana de Valores (BMV) faced a strong Mexican peso, which negatively impacted revenue by MXN 136 million but saved MXN 52 million in expenses, leading to an EBITDA decline of MXN 84 million. Nonrecurring property sales contributed MXN 58 million to revenue, which was up 5% at MXN 1 billion, while expenses increased 5% to MXN 483 million, primarily due to technological and infrastructure investments. Despite these challenges, EBITDA grew 5%. Over the full year, revenue dropped 4% to MXN 3.9 billion, mostly due to lower equity trading, with net income at MXN 1.5 billion and earnings per share declining 8% to MXN 2.65. The trading of equity and derivatives faced downturns, yet there is optimism for a recovery in trading volume in 2024 as monetary policies change.

Balance Sheet Performance

The company delivered a positive performance in capital formation and information services for the fourth quarter of 2023, with noteworthy gains in the debt listings sector and a 20% increase in revenue for long-term debt issuances. Sustainable financial instruments like green bonds gained traction, representing 40% of long-term debt listed, indicating a shift towards sustainable investment practices. Despite a decrease in maintenance revenue by 4%, the total number of long-term debt issuances slightly increased from the previous year.

Strategic Technology Investments and Efficiency

Operating expenses rose by 5%, influenced by increments in personnel expenses, technology upgrades, consulting fees, and promotional activities. Technological enhancements to the post-trade infrastructure and a focus on cost efficiency demonstrate the company’s initiative to improve operational leverage. Persistent efforts are made to enhance the resilience of platforms through technological investments, aiming to offer more efficient and lower-risk trading experiences.

Outlook on Market Conditions and Activities

The management team expressed optimism for the fiscal year 2024, anticipating a stabilizing foreign exchange environment, a shift in monetary policy trends, and increased market activity. This is in tandem with international interest in data services and an expected revamp of the equity market with potential listings on the Fibra and follow-ons. There is also an openness to new market segments that may benefit from infrastructural investments.

Focus on Competitiveness

Executives acknowledged the need for more competitive valuations compared to the U.S. markets to retain and attract IPOs. They are working to enhance the Mexican investor base, aiming to translate increased account numbers into market activity and higher valuations. Looking ahead, new regulatory frameworks could improve the attractiveness of the Mexican market for local listings and increased competitiveness globally.

Data Business Expansion

The company's data business has seen a consistent growth trend in recent years, particularly from foreign markets such as the U.S. and Europe. Strategic investments have been made to improve data center presence and distribution, catering to high-frequency trading clients with low latency demands. These efforts have tangibly improved trading activity and are considered paramount in the business's profitability and growth trajectory.

Earnings Call Transcript 2023-Q4

[Operator]

Greetings, and welcome to the Bolsa Mexicana de Valores Fourth Quarter 2023 Earnings Conference 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, Chief Financial Officer. Please go ahead.

[Ramón Sarre, executive]

Thank you. Good morning, and welcome to Bolsa Mexicana de Valores Fourth Quarter 2023 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 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, in 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 15 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 2022, 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; Claudio Vivian, Chief Information Officer; Hugo Contreras, Chief Compliance and Regulation Officer; José Manuel Allende, Chief Capital Formation, Markets and Information Services Officer; Roberto González, Chief Post-Trade Officer; Gabriel Rodríguez, ICAP CEO; Alfredo Guillén, Managing Director of Equity Markets; Jose Miguel de Dios, Managing Director of Derivatives Markets; Rosa Crespo, Managing Director of Human Resources; Luis René Ramón, Director of Investor Relations; and myself, Ramón Güémez, CFO.

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

[José-Oriol Par, executive]

Thanks, Ramón, and good morning, everyone. Thank you for joining us today to discuss the 2023 fourth quarter and full year results for BMV Group. As you know, we announced our results yesterday afternoon and copies of our press release are available at bmv.com.mx under Investor Relations.

I will go over a couple of points that are important to consider when comparing 2023 versus 2022. Then I will walk you through the different division results and finally, open up to questions on the conference call line.

First, the FX rate had a double impact in the quarter and full year results. About 30% of BMV's revenue and 25% of its expenses are linked to the U.S. dollar. On the other hand, the strength of the Mexican peso had a MXN 136 million negative impact in revenue in 2023, mainly in Information Services and Central Securities Depository-Indeval. While, on the other hand, expenses were MXN 52 million lower than expected mainly in technology and sub-custody fees. The net negative impact on the EBITDA was MXN 84 million.

Second, we recorded nonrecurring revenue in both years. In 2023, we sold the property Pachuca for a net effect of MXN 58 million. And in 2022, we registered MXN 134 million in Indeval and SIF ICAP. The net effect on the EBITDA was MXN 74 million, making 2022 a tough comparison. Therefore, we have presented an adjusted EBITDA.

With that in mind, let's review the quarterly financial highlights. If you can go please to Slide #3 on the fourth quarter financial highlights, the revenue was MXN 1 billion, up 5%, because of nonrecurring sale of property for MXN 58 million and impacted by lower trading in transactional businesses, fewer cross-border transactions and an unfavorable exchange rate.

Expenses were MXN 483 million, up 5%, mainly due to technology upgrades, regulatory projects and consulting services, as well as BMV's building renovation.

EBITDA was registered at MXN 594 million, up 5%.

Net income was reported at MXN 408 million, 8% above fourth quarter 2022.

Earnings per share increased 9% from MXN 0.66 to MXN 0.72 per share.

On the next slide, we will go over the results for the full year. The revenue was MXN 3.9 billion, down 4%, mainly due to lower equity trading, fewer cross-border transactions, last year nonrecurring revenue, as well as FX.

Expenses were MXN 1.9 billion, up 5%, explained by personnel, technology and consulting costs.

EBITDA was registered at MXN 2.2 billion, down 10%. But after adjusting for nonrecurring revenue, the EBITDA decreased 8% with an EBITDA margin of 56% versus 60% last year.

Net income amounted to MXN 1.5 billion.

Earnings per share dropped 8% from MXN 2.87 to MXN 2.65 per share.

In face of persistent challenges in our operating environment, we have maintained costs under control and invested in technology to propel us forward.

On Slide 5 from the revenue by business line, Capital Formation or the listing of equity and debt as well as its annual maintenance contributed this quarter with 13% of BMV's group revenue. Transactional businesses, which consist of equity trading and clearing, derivatives trading and clearing and OTC trading generated 37% of revenue. Information Services made up of data analytics, indices, valuation and financial risk management services had a 19% weight. The Central Security Depository-Indeval, which is responsible for the custody, settlement and global market services, mainly cross-border transactions, participated with 27% of revenue.

Despite facing another challenging year where restrictive monetary policy has been a tough competitor, our diverse and resilient business model displayed a strong growth. Lower equity trading and fewer cross-border transactions in Indeval had a negative impact, while Information Services and Capital Formation remained strong.

Please turn to Slide 6 to go over equity trading and clearing. Revenue in cash equities trading and clearing was down 12% when compared to the last quarter of last year. The average daily traded value, the ADTV, at BMV was registered at MXN 13.9 billion. The local market was up 10%, while the global market decreased 26%. The investors' behavior is influenced by the strength of the peso. The average daily traded value on the BMV throughout the entire year amounted to MXN 15 billion, accounting for an 83% market share. As for the total Mexican market, ADTV was registered at MXN 17.3 billion. That is a 3% drop for the quarter and 10% for the full year.

The operating environment has been challenging for financial markets in Mexico and the world, and we can observe it by the decline in trading activity everywhere. However, we are optimistic about 2024 and expect a recovery in ADTV as the Central Bank changes its monetary policy.

CCV revenue was down 9%, even though ADTV was only down 3%. This is explained by a higher number of gross rates in the fourth quarter of 2023, which only need to be registered but not cleared.

Let's go on the next slide to review Derivatives. Revenue in Derivatives trading and clearing was down 15% in the quarter due to lowering of dollar futures. Last year, clients closed positions for the March and June expiration. However, new positions are again being opened, allowing open interest to recover significantly between the June low and December 2023. Since dollar futures have been the main driver of MexDer, we are planning to list many dollar futures in the coming months.

On the other hand, interest rate swaps were very attractive in the last quarter given the uncertainty in the market. The total value of interest rate swaps or notional value increased 118% year-over-year.

In Asigna, the average margin deposits were MXN 37 billion for the quarter and MXN 35 billion for the entire year, showing increases of 2% and 4%, respectively.

On Slide 8 on the OTC trading. In SIF ICAP, OTC trading and value-added services made good progress, with revenue reaching MXN 182 million, up 3%. SIF ICAP Mexico increased 15%, mainly explained by a reversal of a provision and higher trading of interest rate swaps. SIF ICAP Chile was down 3% because of negative foreign exchange effect. The Chilean peso was down 9% against the Mexican peso. However, there was a higher trading in FX forwards and interest rate swaps in the period.

On Slide 9, we have the figure for the Capital Formation. Listings performed strong in both short-term and long-term debt markets, with revenue increasing 20%. In short-term debt, 302 issuances were placed for a total amount of MXN 62 billion. While in long term, 34 issuances were registered for a total amount of MXN 110 billion.

I want to emphasize that in 2023, 6 companies in Mexico debuted in the Mexican market by issuing debt, with all of them choosing the BMV as their platform. Also, I am very glad to share with you that BMV finished the year with a 96% market share in number of listings, up from 92% in 2022. Furthermore, it is worth noticing that 40% of the total long-term debt issued in BMV was sustainable with the market bonds and sustainability-linked bonds. We will continue promoting this market to our digital platforms and educational programs.

As for alternative listings, Mexico Infrastructure Partners listed 2 securities for MXN 8.5 billion. In the equity market, there were no listings in the fourth quarter. However, we had a couple of follow-ons at Traxion, Fibra E Social, Fibra Prologis and Fibra Nova during 2023.

Regarding maintenance, revenue was down 4% since the amount issued is not directly linked to revenue due to gaps in our fees. The debt market is recovering, and we have facilitated larger issuances. However, the number of bonds reaching maturity has exceeded the number of new issuances. At the end of 2023, there are 485 long-term debt issuances compared to 482 in 2022.

Moving to the Central Securities Depository on Slide #10. Indeval's revenue was down MXN 21 million in the fourth quarter, MXN 12 million because of a lower number of cross-border transaction and trade settled in the global market and MXN 9 million due to FX, mainly in the global market services and global custody whose fees are in U.S. dollar. Assets under custody increased 12% in the local market to MXN 33.6 trillion and 4% in the global market to MXN 1.6 trillion.

As announced previously, we are currently working to accelerate the settlement cycle to T+1 in May 2024, in line with the U.S. and Canada, to better serve market participants by offering a more efficient transaction and mitigating risk.

Finally, on Slide 11 on the Information Services. Revenue reached MXN 181 million in the fourth quarter of 2023, up MXN 11 million or 6%, mainly due to international clients, local retail investor and valuation services at Valmer. Under a constant FX scenario, revenue would have increased MXN 24 million or 14% year-over-year. We foresee continued annual growth in this business segment driven by a strong international demand for our data.

All in all, a good set of numbers in Capital Formation and Information Services. Nevertheless, equity trading and Indeval faced hurdles during this period due to the prevailing interest and exchange rates, leading to an impact on the traded value.

As mentioned earlier in the call, the strength of the Mexican peso had a negative impact of MXN 132 million on revenue in 2023. Going forward, we anticipate a shift in monetary policy trends, a more stabilized foreign exchange landscape and increased activity across financial markets. We hold a positive outlook for 2024.

Now let's look at our operating expenses in Slide #12. Operating expenses in the fourth quarter and full year 2023 were up 5%. And I will go over the main items on a year-to-date basis: personnel expenses, up MXN 40 million or 5% due to the net effect of annual salary increments at the beginning of the year and higher long-term variable compensation in 2022; technology, up MXN 42 million or 13%, mainly due to updates in our technological platform as well as the segregation of post-trade infrastructure; consulting fees, up MXN 23 million or 26%, mainly explained by the assessment of third-party technological platforms in post trade as well as strategic and organizational culture consulting fees; sub-custody expenses were MXN 35 million or 39% since Indeval was authorized as a qualified intermediary by the U.S. Internal Revenue Service and negotiations for improved commercial terms; promotional activities or marketing were up MXN 8 million or 24% because of a greater number of customers and corporate events.

It is important to note that foreign exchange fluctuations had a positive impact on expenses that amounted to MXN 52 million lower cost, mostly in technology and sub-custody. Moving forward, we remain committed to cost efficiency and striving for greater operational leverage as we make strategic investments in technology to bolster the resilience of our platforms.

In Slide #13, on the summary. Notably, 2022 makes for a tough period to compare with because of extraordinary revenue concept and foreign exchange fluctuations. The appreciation of the Mexican peso against the U.S. dollar resulted in a negative impact of MXN 84 million or minus 10% on the EBITDA. However, after adjusting for nonrecurring items, BMV's EBITDA was down 8% and, under constant foreign exchange rate, it decreased 4%.

Despite facing a turbulent year marked by geopolitical conflict and restrictive monetary policy, we have made great progress in fulfilling our strategic objectives, maintaining a strong client focus, further developing a sustainable business and evergreen technology platforms.

In 2023, our capital expenditures in technology were MXN 188 million. That is MXN 116 million higher than last year but in line with our investment plans. Furthermore, a couple of weeks ago, we finalized a contract with NASDAQ to modernize our post-trade technology platform. The agreement expands Grupo BMV long-standing technology partnership with NASDAQ established almost 10 years ago with the provision of the Mexican Stock Exchange surveillance system.

The strategic steps we have taken to accelerate the technological evolution of BMV Group will enable us to better serve our clients in the future. We remain committed to collaborating financial authorities to advance the approval of our strategic projects, notwithstanding the electoral cycle.

On a different note, during 2023, we bought back 8.7 million common shares under our buyback program, and we intend to maintain this approach going forward. Furthermore, yesterday, our Board approved to recommend to the shareholders' assembly an annual dividend of MXN 2.12 per common share or 80% payout.

That concludes my formal remarks, and I thank you for your time. And together with my colleagues, 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]

I have three questions from my side. The first one would be on revenues. So we have seen that in '23, Bolsa posted soft revenue growth impacted by different external factors such as FX and rates. However, do you think these trends could start to revert in 2024, especially considering that we will start, at some point, the easing cycle and also lower rates should lead to a potential depreciation of the peso? So can you share with us, if we have both trends on action, which would be the revenues that should benefit from both impacts?

Then my second question is in terms of new listings. So far, we have seen positive activity, especially in the real estate sector. We have seen follow-ons, and this, to take advantage of the new shoring opportunities. However, I would like to hear if there are other sectors that you have in your pipeline. And also, well, I would like to hear your point of view on why BBB was listed in the U.S. and not in Mexico? And what are you trying to do? Or what will be the strategy to incentivize companies to list in Mexico?

And then my last question is on the regulatory front, there is this regulation on the new securities law. It's already approved. And now the secondary regulation is the next step now. so I would like to hear from you when should we expect this secondary law to take place? And when do you see the entrance of multi-assets or hedge funds coming into Mexico?

[Ramón Sarre, executive]

Thank you, Ernesto. Let me begin with the first question, what do we expect for revenue trends, we are expecting a better year. Specifically, we don't expect the FX to appreciate further, and we are expecting just more volatility. So this should impact the lines that were impacted in the previous year, specifically equity trading, equity clearing and Indeval.

Regarding your second question, I'll pass it on to José Manuel.

[José Allende Zubiri, executive]

Regarding pipeline and listings, I should point that we had a very good year on the debt listings, on the long-term specifically, doing over 60% versus 2022. We still have companies willing to come, exiting the market in the next, I would say, 2 to 3 months, maybe MXN 30 billion on the debt segment from different sectors, real estate, manufacturing, infrastructure. So we will still have activity on the debt segment.

Regarding the equity, we may have some listings on the Fibra, as you pointed, also some follow-ons in the Fibra, the real estate sectors. We may have some companies coming up from spin-offs like the America Aguilas Football. And we are having also some CERPI requests and process that will be coming to market in the next month.

Regarding the new shoring, of course, real estate is the most notorious segment that will be benefited immediately, and it's coming to the market to finance some of those needed. But we think after that, some sectors on manufacturing or commercial may be willing to come to market to set up the infrastructure that will go around the real estate, schools, hotels, industrial plant segments, logistics. So I think it's the beginning of a good cycle that may build companies willing to come into the market.

Regarding security market law, as we talked last quarter, it was approved, the new security market law, to make easier, cheaper and faster the access and listing process for midsized companies through the oferta simplificada. In the last couple of months, we've been working with authorities for the secondary legislation definitions, as to what type of companies will qualify for this oferta simplificada or the amount that could be placed on the market. We're trying to push the numbers up, so a higher number of companies may qualify to access on this segment.

We also have started additional educational programs, such as De cero a Bolsa program, to help companies get involved in this financing process, no requirements, benefits and how to get started into the securities financing. The idea, what we heard from authorities, is to have the final consultation and secondary legislation in March, considering all these things that I mentioned. And hopefully, by the second quarter, everything will be in place and ready for approval. We think it's a good proposal. It may attract new companies to explore financing through the exchange. Some that may now are not considering the Bolsa. We still have work to do on other items such as the demand side, investor base education. So we are optimistic on that.

But the other part regarding multi-asset and hedge funds, that's included on the mutual fund law. And that secondary legislation will be discussed and implemented after we launched the securities market part for the oferta simplificada. So the hedge fund will take a little bit more time.

[José-Oriol Par, executive]

Ernesto, thanks for attending and for your question. You were also asking about BBB IPO. I would say that in general terms, and I have mentioned that a couple of times, we have a real and strong competitor, that is, the U.S. market. And this is not just the case for Mexico. We have seen companies in Latin America doing its own IPO in the U.S. We have seen even in the past days companies from Europe moving their primary listing, from a couple of days ago, from U.K. to U.S. So I think that this has been a global trend. Now we have to compete with the U.S.

Why are companies moving or doing their IPO in the U.S.? In my personal opinion, I think the first reason is the valuation. And comparing with Mexico, if we look at the valuation of the companies that are listed in the Mexican Bolsa Index, we are talking about like 6x EBITDA. If we look at the Dow Jones, the number is twice that, it's around 12x EBITDA and much higher if we look at the S&P 500 or the NASDAQ. In the particular case of BBB, I think that it was like 25x EBITDA placed in the U.S., and the comparable companies in Mexico should be around 12x. So I think that the question would be why the valuations are much higher in the U.S. than in Mexico or in other countries. And I think that the reason is that the investor base in the U.S. is definitely much higher than in most of the countries, including Mexico.

So we have to work on that. We have to work, and we have been in Mexico working in increasing the number of accounts, the number of investors, the number of participants working on financial culture. And we have seen an increase in the number of accounts in Mexico, so now we have to translate that in more activity and better valuations. So in summary, we have to be much more competitive to the U.S. in order to have the IPO and to maintain the companies in our countries and, in our particular case, in the case of Mexico.

[Operator]

Our next question comes from the line of Carlos Gomez with HSBC.

[Carlos Gomez-Lopez, analyst]

The first one is about the ForEx. Again, you have given very precise numbers as to the impact of the ForEx appreciation. Is this symmetric? If we were to see a depreciation of the peso this year, would this be a linear function? Would we still see a reversal of what you lost last year? Or is it not, it doesn't affect? And second, if you can give us an update on your data business.

[Ramón Sarre, executive]

Carlos, yes, the impact on the FX will be symmetric. If we had a peso depreciation, we would expect a positive impact on revenues and a negative impact on expenses. But a net impact overall, rough numbers, I would say the dollar moving by MXN 1 represents roughly MXN 50 million in EBITDA, rounding, obviously. .

Regarding your second question, we couldn't hear it properly. Could you repeat that, please?

[Carlos Gomez-Lopez, analyst]

Yes, my apologies. Could you give us an update about your data business, both in Mexico and outside?

[Ramón Sarre, executive]

Sure. I'll let José Manuel take that one, on the data business.

[José Allende Zubiri, executive]

Regarding the data business that had been growing importantly for the last years, maybe 3, 4 years had been growing in over double digit on revenues, it's on the real-time distribution data feeds, which have mainly been growing in foreign markets, especially in the U.S., a little bit in Europe. And that has been because of the investment we did some years ago by setting up a point of presence in New York by which we took our data into data center where many high frequency or institutional investors that trade in Mexico get the data. And that has helped us also specifically in the high-frequency trading clients, for them to get the data on low latency, to get their algorithm working and route their orders through our channels or through the brokers' channels. And that has also improved a little bit the trading activity. So we are focused on growing that segment of the business, which is the most profitable in the data segment. We are trying also to increase the presence of our data feeds on Europe through some agreements that we have set up with European exchanges to distribute our data to end users in Europe.

[Operator]

And our next question comes from the line of Edson Murguía with [ Summa Capital ].

[Edson Murguia, analyst]

I have a couple of questions. Question 1 is related to the nonrecurring sale of a property that you mentioned in the press release. Could you give us a little bit more color about this? Because as you mentioned in the press release, it's for MXN 58 million. Just trying to figure out if you are considering selling part of the properties or Bolsa, trying to figure out what will be the strategy behind that?

Before my questions, congratulations on the 25th anniversary of MexDer and all the achievements that you have done. But my question is regarding the global markets, many market participants are looking for options trading, what is the strategy of Bolsa regarding options if you compare it to other markets?

[Ramón Sarre, executive]

Edson, thank you very much. Regarding your first question on the MXN 58 million impact from the sale of a property, many, many years ago, the exchange had the idea of building a site, an IT site, and it worked for a while. And we had that property, and we sold it. It's a one-off thing. We don't have other properties around, and we're not planning to sell our current building. So it's really a one-off thing. We're not in the real estate business in any way. And it was just an initiative many, many years ago, back in the '90s.

And regarding the options trading strategy, [ CEO ] is already smiling broadly.

[José-Oriol Par, executive]

Thank you, Edson. Well, we have been working with the authorities to list the futures and options for the SIC stocks. So we believe that the option in the SIC stocks will be very important or very good for retail customers. So we have been receiving some interest for some participants to promote with their retail clients. So these kind of products can be very good for them. So we think that options in the SIC stocks will be very good for the market.

[Edson Murguia, analyst]

Okay. And my last question, it's a follow-up about the attractiveness of the Mexican market regarding 3D listing. Because I can understand what Oriol said already, but my question would be this second part of the regulatory framework that you are expecting with authorities to be ready by March 2024, are there more incentive why companies will be listed in the Mexican market rather than in the U.S. market?

[José-Oriol Par, executive]

Edson, I think that these changes in the law that were approved at the end of last year and the secondary regulation that we are working with the authorities, this is definitely going to make much more attractive the market in Mexico. It's going to bring new companies, and it's going to add companies that are not in the market today. But basically, this new regulation is giving possibilities for companies with lower requirements with a faster process, with lower cost to come to the market.

But in addition, I think that we are quite optimistic in Mexico for 2024 for several reasons. First, we are seeing that the Mexican economy is doing pretty well, especially in the north of the country. We are seeing very strong fundamentals and a lot of investors coming to Mexico, in addition to the new shoring activity that we have seen. And the geographical, demographic position that we have in Mexico, there is a great opportunity compared to other countries.

In addition, I think that for this year, we're also optimistic on the competition that we had last year on the interest rate market. At some point, we and the analysts are expecting that rates should start to come down following lower inflation. And in addition, this year, we could have some additional volatility because of elections, not just in Mexico in June and in the U.S. in November and in other countries, so it could be a more volatile year than 2023. And this could be positive news for some of our activities as cash equity trading and CCP and CSD. So we are optimistic Mexico for 2024 for several reasons.

[Operator]

At this time, there are no further questions. I'd like to turn the call back to José-Oriol Bosch for closing remarks.

[José-Oriol Par, executive]

Well, so once again, thanks to all of you for attending our quarterly conference call. Thanks for all your questions, and have a great day. See you next quarter. Thank you. Bye.

[Operator]

Thank you. This concludes today's conference. You may now disconnect. Have a great rest of the day.