Greetings, and welcome to the Bolsa Mexicana de Valores third quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Ramón Güémez, Chief Financial Officer for Bolsa Mexicana de Valores. Thank you. You may begin.
Thank you. 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 and 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 re-recorded, and a replay of this call will be available online on October 21st at Bolsa's Corporate website, www.bmv.com.mx. During this call, all figures are 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, José 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, José Miguel de Dios, Managing Director of Derivatives Markets, Rosa Espino, Managing Director of Human Resources, Luis René Ramón, Director of Investor Relations, and myself, Ramón Güémez.
I would now like to turn the call over to our CEO, José-Oriol Bosch Par.
Thank you, Ramón. 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. Let's get started in slide three to review the financial highlights, please. 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 nine months of the year, please turn to slide four. 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 concepts in the balance SIF ICAP. Expenses are up only MXN 18 million or 1% for the first nine months of the year.
EBITDA is up 13% to MXN 1.9 billion, and EBITDA margin was recorded at 62%. 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 nine-month results with good underlying performance across most divisions. If you go to slide five regarding the revenue by business line for the first nine months of 2022, our operations are well diversified across the value chain with highly recurring revenue in nature and a strong customer 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 non-recurring tax reforms 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. 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 three quarters of the year. In the next slide, I will give you more color about each business line. If you can turn to slide six, starting with equity trading and clearing.
Cash equity 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's SIC or global market. The latest regulatory changes regarding the best execution rule or the way we see it, a forced 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 market. 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 cross trades in the period, which only require to be registered. On next slide, on slide seven, 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 TIIE 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 futures with institutional clients and longer tenure swaps. Average margin deposits for the first nine months of the year are down 3% to MXN 33.4 billion, in line with our expectations and as a result of a 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 SIC-listed foreign securities in Mexico, given the success of the global market or SIC.
On slide number eight, 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. 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 non-recurring tax refunds in Chile. The VAT refunds have no impact on personal expenses. On slide nine 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 FONACOT for MXN 4 billion. As well as a sustainable bond from the State of Mexico for MXN 2.9 billion. To date, 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 2two fronts. First, within our organization by leading by example.
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 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 was 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 custody 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 sub-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 products, and fee increments.
Valmer is up 12% due to the implementation of a portfolio management software, which including consulting expenses and valuation services. The acceleration reflects the improvement we have delivered in sales, new products, and services. Now let's look at our operating expenses in slide number 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 hardware 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, VAT refunds in Chile, and the segregation of Post-trade's infrastructure. Sub-custody down MXN 4 million due to lower costs associated with the administration of tax forms and W-8 formats. CNBV fees are linked to inflation, up MXN 2 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 plans. As slide 13 shows, direct custody, CCV for bonds, and accepting securities as margin 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 infrastructures for Indeval, Asigna and CCP. This initiative is part of our efforts to continue enhancing our resilience for all market infrastructures. We will start registering hardware 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 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 quants and algo trading.
Data is the insight that drives 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 records 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 Universidad Anáhuac and finished second place in the Gender Equality Contest by the Instituto Mexicano de Ejecutivos de Finanzas and Mujeres en Finanzas. 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 Bolsapp. This initiative is a joint effort and is being carried out by companies listed in the BMV, brokerage houses and fund managers. It shows 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 automating 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 risks, 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 gladly answer any questions you may have. Thank you very much.
Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Ernesto Gabilondo with Bank of America. Please proceed with your question.
Hi, good morning, Oriol, Ramón, and Luis René, and good morning, everybody. Thank you for your presentation. 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? My second question is related also to the best execution implementation and competition. We saw BIVA return to the double-digit market share.
Just wanted to hear from you how you see the implications for Bolsa's revenues in the next 12 months if BIVA maintains a 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 Casas de Bolsa to BIVA will allow Bolsa to start charging tariffs that before were not recognized because they were already above the upper limit? Then for my final question is on your EBITDA margin. We saw it came below the 60%. Just wanted to hear your thoughts, if you think it could be again at the 60% level, and what will be the drivers behind it. Thank you.
Hello, Ernesto. It's Alfredo Guillén. I'm Head of Equity Markets. Regarding the best execution regulation, we have explained that it's more a forced distribution of orders or allocation of orders than a best execution of trades, which is not seen in other markets worldwide. We believe clients will eventually realize that their orders could be optimized with a better regulation. We expect our market share will stabilize in 82% next year, as a whole, for both markets. 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. It's marginal at this point. In terms of our...
The brackets of our table for, 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. 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, no? Basically that's what we see in best execution regulation.
Thank you. Our next question comes on the line of Juan Noto with Bradesco BBI. Please proceed with your question.
Hi, good morning, everybody. I think there was a few questions before me that weren't answered, but I can continue.
Yes.
We have continued to see reports on a potential securities reform in Mexico. What we know so far from compiling different media reports is that the proposal aims to simplify the listing process and allow brokers to carry out some oversight responsibility, but also give greater protection for companies to maintain control. From your perspective, what should the bill include and where can consensus be reached? Thank you very much.
Thank you for your question. Maybe, we were in the process of answering all the questions from Ernesto.
Ernesto, if after this you'd like to ask your questions again, and we'll get back to you. We'll just take Juan first.
Okay. Good morning. Regarding the securities market law, we have been working closely with authorities and other market participants for some changes in the law. I will say there are four or five 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 exempted from some processes and requirements on the securities commission. Relying all those processes to the exchanges, hoping to make this faster and easier permits 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 non-voting shares without any restriction, but only to make it public to investors. The third one should be related to the SAPI Bursátil. This type of security by canceling some provisions by which a company has to adopt the transition to a SAPI. It may be a permanent segment with lower listing and governance. The fourth one, there are some technical changes to make easier the follow-on processes or secondary offers. All these changes are aimed to help and improve the listing activity and to attract more companies to the market. These are the ideas on the 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, basically the Circular de Emisoras, which hopefully will be by the early next year.
Thank you.
I will 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. They are aware of that and they are willing to make changes including some changes in the law, as José Manuel mentioned, to continue to develop the Mexican exchange market. I think that is a good opportunity for all of us.
Great. Thanks for the call.
Great. Thanks to you.
Thank you. Mr. Gabilondo, please proceed with your questions.
I think that the one on the best execution was answered. Just wanted to hear from you if 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. The other question was on your EBITDA margin. We saw it came below the 60%. Just wanted to hear if you're saying it could return to the 60% level in the next quarters, and what would be the drivers behind that?
Okay. Listen, for the EBITDA margin, yes, it's still below. Hopefully we'll be back, you know, closer to 60% or above 60% for Q4. The driver would be any additional market activity. I think we had a low. We didn't have very good market development and assets under custody are not doing too good. So any, you know, recovery from the market could definitely help us. Regarding the difference, the three less brokerage houses are costing us around MXN 1.5 million. As for the difference in market share, how much that would be, that's difficult to say, you know.
I think that this is difficult to answer and some of them are the global institutions that could be trading from out of Mexico. I think that to close a Casa de Bolsa in Mexico was more a business decision. 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. 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 the financial authorities and probably are gonna be trading soon.
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 these Casas de Bolsa. I will also add that the traded volume for the first nine months of the year was higher than the traded volume for the nine months of 2021. 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.
Anyway, I think that what it is important for us is that the total traded volume between both Bolsas 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 traded 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 a traded volume that once it is fragmented-
If the total traded volume in between both is lower, then I think that is gonna be a lose-lose situation for everybody.
Perfect. Thank you very much, Oriol and Ramón.
Thanks to you, Ernest.
Thank you.
Thank you. Our next question comes from the line of Alonso García with Credit Suisse. Please proceed with your question.
Hi. Good morning. Sorry. Good morning, everyone. Thank you for taking my question, and also 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. If there is any impact you can estimate on your OpEx line from the infrastructure segregation that you also mentioned. Thank you.
Thank you, Alonso. Regarding the historical market data for quants and high frequency traders, our goal is a chicken and egg situation where we want to provide data to make it more transparent, to give more confidence to the market, to find inefficiencies that will close the spreads and that will attract new types of clients to our markets. As for the opportunities, the size of the opportunity, we believe that on data it will help us support our double digit growth for the coming years. What we expect is that because of this data, we will have a higher value traded, or that's what we're expecting, a 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. We'll be reporting the results in Q1 and probably Q2 of next year.
Milton.
Thank you. Any impact you can estimate on the OPEX line from the infrastructure segregation?
From segregation, you mentioned?
Cost, impact on the OpEx.
On the segregation, starting Q4, we are receiving already all the hardware which is leased, and we will be depreciating. 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 ten 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.
Got it. Thank you very much.
Thank you.
Thank you. Our next question comes from line of Jorge Henderson with Santander. Please proceed with your question.
Thank you. Hi, Oriol and Ramon. Luis, thank you for the presentation and the space for questions. I have two questions. The first is regarding your capital allocation strategy. I wanted to ask if 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 if you have anything new there. My second question is on expenses. What should we expect for expenses in the next quarters? I mean, you mentioned this new hardware around the segregation project. But I don't know if you have more detail on that and you see reasonable to expect deterioration on efficiency in the next quarters considering top line growth may remain moderate in the short term. Thank you.
That will be it.
Thank you, Jorge. Regarding our capital structure, we're 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 expenses, the expense expectations for next quarter, we're not expecting any major surprises. We'll be definitely having a little more expenses, as Luis said, from this Post-trade segregation project, but it's nothing, no major surprises.
We should expect expenses growing below inflation?
At least for Q4, yes.
Okay. Thank you. I just wanted to confirm a number you, I think you shared. You say that you expect Information Services to grow double digits for next year? Maybe I got wrong. Just wanted to confirm.
Double digit, yes. Yes, that's what we would expect.
Okay, perfect. Thank you very much.
No, thank you.
Thank you. Our next question comes from the line of Edson Murguia with Summa Capital . Please proceed with your question.
Hi, thank you for taking my questions. The first one is a follow-up regarding the services that were canceled by some broker-dealers. Specifically what type of services? Because it's my understanding that Deutsche Securities is running and looking for a different type of approval from Banco de México. I was trying to figure out what type of services were canceled. That would be the first one. The second one, I was wondering if you can give us a little bit more color about this new derivatives and if these new type of options are gonna be part of this conversation after the new regulation that is ongoing. Thank you.
Edson, we couldn't hear you very well. Could you repeat the first question?
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.
If I understand correctly, your first question is regarding the three brokers that left Mexico.
The services.
the services they canceled?
Yeah, because Deutsche Securities, it's not. It's working, I mean.
They pay a membership fee and also infrastructure connection fees.
Okay.
Less brokers reduce our revenues in those concepts.
Okay. Okay.
Yeah, the Casa de Bolsa in Mexico, they have fixed and variable costs. On the fixed side, they were paying one membership fee, flat fee to all the Casa de Bolsa, to the Mexican Bolsa. This is part of the cost that have been increasing and that the Casa de Bolsa have been complaining because since 2018, they have been paying two memberships. The fixed cost in this particular item, as an example, increased by 100% because now they are paying two memberships. This increased the cost for the Casa de Bolsa. Now, those Casa de Bolsa, what they are doing are reducing these fixed costs.
In this one we all lose, because the BIVA membership that they were paying to BIVA and the Bolsa now is gonna go to zero. This is part of the effect of increasing more the cost and the expenses than the benefits.
Okay. Okay, makes sense. Thank you, Oriol.
Thank you, Edson.
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. Around one month ago, we received some requirements to do some changes in the specs. 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.
Okay. Last, regarding on current liabilities, this quarter increased 33%. Looking forward to the end of 2022, these current liabilities are gonna be in the same level or we are expecting because of the decisions that you are planning to do so, getting lower?
Yes. As Oriol mentioned, we have a historical record in the open interest in the dollar futures. We believe that next year we are going to have growing the volumes in the dollar futures because we have a very high open interest in dollar futures and in swaps.
Okay. Thank you so much, Oriol, Ramón, and Juan.
Thank you, Edson.
Thank you. Our next question comes from the line of Guilherme Grespan with JP Morgan. Please proceed with your question. Mr. Grespan, your line is live.
Hey, good morning, everyone. Thank you for opening for questions. 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. Just to get a sense how risky are those other lines for potential implications of the new execution rules. Thank you.
Yes. I think that's a pretty good point. Again, let's assume in the past, if the traded volume was, let's say 100, and today the traded volume is 80 at the Bolsa and 20 traded at our competitor, then we only have an impact that Alfredo 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 90%, let's say 90% between both exchanges will have a negative impact, not just in the cash equity business, but at the CCV, at our clearing house, at the CCV, will have also an impact at Indeval, will also have an impact at the market data. This, I agree and I share, this is the concern, and we have shared that with financial authorities. What we have to do is to avoid the impact of this fragmentation and having an even smaller market exchange market in Mexico. So far I think that it is contained, but hopefully it's not gonna be bigger than that.
All the impact that we are going to have is the already mentioned around 1% currently, the 3% that MXN 30 million, $1.5 million on the total revenue.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from line of Gilberto Garcia with Barclays. Please proceed with your question.
Hi, good morning. Thank you for the call. A couple of follow-ups. You mentioned that the impact from the broker that ceased operation was MXN 1.5 million. Is that the aggregate impact or per broker? On expenses, you mentioned that for the fourth quarter they should grow below inflation. I'm assuming that is excluding the non-recurring items that you had in the fourth quarter of last year, right?
Gilberto, MXN 1.5 million is the impact of the three brokers for the quarter. You'd have to times that four for a full year impact. Could you repeat your second question, please?
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 non-recurring items that have a favorable impact on expenses in the fourth quarter of last year?
Yes.
Okay. At this point, I mean, I know that you didn't provide guidance for this year, but thinking about next year, is it reasonable to expect expenses to continue to grow below inflation?
No.
Okay. Thank you.
Sorry for such a short question, but I mean, I could say the same thing over ten 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.
Right. No, no. That's fair. Obviously it's been rather strong execution over the past quarter given this inflationary environment. Appreciate the concise answer.
Now, you know, in spite, you know, notwithstanding the shortness of the answer, we will of course continue with our efforts to control costs and mitigate expense growth as much as we can, you know. Yeah, I don't see it as realistic that they will grow below inflation.
Very clear. Thank you.
Thanks.
Thank you. Our next question comes from the line of John Barnett with Barnett and Company. Please proceed with your question.
Yeah. Hi. Thanks for taking my question. I guess as a preamble, and 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. I was curious, do I understand this correctly? What is the Bolsa 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? Thanks.
Hi, John. Yeah, regarding tax issues for IPOs and companies coming to market, a couple of years ago, there was a decree 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 decree 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. In the same time, we're talking to authorities and getting the idea that it would be good to get an additional benefit to take out this 10% and to move.
To remove it and just go into the zero structure that we had some years ago. We're working on that and talking to authorities to push that forward.
Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Oriol Bosch for any final comments.
Okay. Thank you very much to all of you for participating, for your questions and your attendance. Thank you very much and talk to you next quarter. Have a great day. Thank you. Bye.
Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.