Greetings. Welcome to Bolsa Mexicana de Valores' Q1 2024 earnings conference call. At this time, all participants are in a listen-only mode. A Q&A session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to Ramón Güémez. Thank you. You may begin.
Thank you. Good morning, and welcome to Bolsa Mexicana de Valores' Q1 2024 earnings conference call. Before proceeding, I would like to provide a brief safe harbor statement. This presentation contains forward-looking statements and information related to Bolsa that are based on the analysis and expectations of its management, as well as assumptions made and information currently available at Bolsa. Such statements reflect 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, 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 and 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 recorded, and a replay of this call will be available online on April 25, at Bolsa's corporate website, www.bmv.com.mx. During this call, all figures are in Mexican pesos and compared to the Q1 of 2023, 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, Claudio Vivian, Chief Information Officer, Hugo Contreras, Chief Compliance and Regulations Officer, José Manuel Allende, Chief Capital Formations, Markets and Information Services Officer, Roberto González, Chief Post Trade Officer, Gabriel Rodríguez, SIF ICAP CEO, Alfredo Guillén, Managing Director of Equity Markets, José 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.
Thank you, Ramón, and thanks to all of you for joining us today to discuss the 2024 Q1 results for BMV Group. As you know, we announced our results yesterday afternoon, and copies of our press release and the slide deck are available at bmv.com.mx under Investor Relations. To start, I would like to go over the foreign exchange fluctuations from our revenues, expenses and EBITDA, as this factor is important for a comprehensive year-over-year comparison. Then, I will walk you through the different division results and finally open up to questions from the conference call line. FX had a double impact in the quarter. About 30% of BMV's revenue and 25% of its expenses are linked to the US dollar.
On one hand, the strength of the Mexican peso had a MXN 28 million negative impact in revenue in the Q1, mainly in information services and the central securities depository, Indeval. While on the other hand, expenses were MXN 13 million lower than expected, mainly in technology and substantial deficit. The net negative impact on the EBITDA was MXN 15 million. With that in mind, let's review the quarter's financial highlights in slide number 4. In the Q1 of 2024, key financial highlights: The revenue was MXN 967 million, down 7% because of lower trading in transactional businesses, fewer cross-border transactions, and an unfavorable exchange rate. Expenses were MXN 477 million, up only 1%, mainly due to personnel expenses and the depreciation of leased hardware.
EBITDA was registered at MXN 552 million, down 11%. Net income was reported at MXN 375 million, 10% below the Q1 of 2023, but in line with the latest three quarters. The quarter was marked by a challenging environment defined by persistent high interest rates and a strong peso. Despite this ongoing quarter, we have properly controlled costs and made the strategic investments in technology to drive our progress forward.... On the next slide, we'll go over the revenue by business line. In a slide number, number five, capital formation of the listing of equity, debt, and alternatives, as well as its annual maintenance, contributed this quarter with 14% of Grupo BMV 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 17% weight. The Central Securities Depository, Indeval, which is responsible for the custody, settlement, and global market services, mainly cross-border transactions, participated with 28% of revenue. The softer performance came from information services and central securities depository because of FX. It not only affects our top line, but also influences investors' behavior, which is evident in the decline observed in equity trading, clearing, and settlement in the global market of SIC. Nevertheless, we anticipate a more dynamic market in the upcoming months, driven by the elections in Mexico and the U.S., as well as other ongoing geopolitical developments. Please turn to slide number 6 to go over equity trading and clearing.
Revenue and cash equities trading and clearing was down 10% when compared to the Q1 of last year. It is important to highlight two things. First, in the Q1, there were only 60 business days compared to 63 in the previous year. Second, MXN 7 million correspond to non-recurring revenue, and after excluding this item, the variation shows a decrease of 18%. This number is consistent with the average daily traded value, the ADTV, at BMV, which was registered at MXN 14.6 billion, down 21%. The local market was up 6%, while the global market decreased 45%. As mentioned before, the investors' behavior is influenced by the strength of the peso. On the positive side, during the Q1 of 2024, we regained 200 basis points in market share, ending at 82%.
As for the CCP, revenue was down 10%, even though the total ADTV for both Mexican exchanges was down 18%. This is explained by a lower number of cross trades in the quarter. Let's go to the next slide to review derivatives. On derivatives trading and clearing, the revenue in derivatives was down MXN 3 million, or 5% in the quarter, due to lower trading of dollar futures, as well as fewer business days compared to the same quarter last year. The average daily notional value of dollar futures reached $342 million, up 4%, while the open interest decreased 16% due to clients closing positions in the period. As you well know, dollar futures are the main driver of MexDer, therefore, we are planning to list mini dollar futures in the coming months.
In Asigna, the average margin deposits were MXN 42 billion for the quarter, showing an increase of 11% due to excess deposits by clients. The net effect of lower trading and excess deposits shows a small gain of MXN 1 million in revenue. On slide number 8, on the OTC trading, in SIF ICAP, OTC trading and value-added services revenue decreased MXN 11 million, or 6%. SIF ICAP Mexico dropped MXN 9 million, primarily due to lower CO2 emission compensations via carbon credits from Mexico CO2. Meanwhile, revenue at SIF ICAP Chile was down MXN 2 million due to FX. The Chilean peso depreciated 9% versus the Mexican peso in the quarter. On slide number 9, we have the figures for capital formation. Listings performed strong in both short-term and long-term debt markets, with revenue increasing 49%.
In short-term, 342 issuances were placed for a total amount of MXN 70 billion, while in long-term debt, 23 issuances were registered for a total amount of MXN 99 billion. In the equity market, FIBRA Prologis conducted a primary, public, and private offering of certificates totaling MXN 9.6 billion, while FIBRA Monterrey also carried out a primary, public, and private offering of certificates totaling MXN 7.8 billion. In the Q1, we continue witnessing a recovery fueled by growth projects, nearshoring, and in this instance, a favorable peso that encourages companies to opt for local debt over international options. I would also like to mention that the secondary laws to the amendments to the securities market law continues under review.
BMV has started a program called the Cero a Bolsa, which means from zero to bolsa, with the goal of explaining companies the benefits of issuing debt or equity in the market and process to get there. We will review the small print and work together with financial authorities and intermediaries to make this possible. Regarding maintenance, revenue was down 4% due to variations in the timing of revenue recognition last year. Given that the number of outstanding emissions is in 2023, was slightly above the previous year, you can anticipate a modest annual growth in this line. Moving on to the central securities depository on slide number 10.
In deval , revenue was down 5% or MXN 15 million in the Q1, or 5%, while a reduction in cross-border transactions and rates settled in the global market, along with the FX fluctuations, had a MXN 26 million impact. The increase in assets under custody resulted in a gain of MXN 11 million. Assets under custody increased 12% in the local market to MXN 35 trillion, and 11% in the global market to MXN 1.7 trillion. The pension market reform is beginning to show its effect in the numbers, and we foresee a gradual but sustained benefit from this initiative over the next 6 years.
As announced previously, we are currently working to accelerate the settlement cycle to T+1 in May 2024, in line with the USA and Canada, to better serve market participants by offering a more efficient transaction and mitigation risk. Moreover, we have started implementation with Nasdaq to modernize Indeval and CCV infrastructure. This is a 3-year project that will replace our in-house development and open the door to new services in the future. Finally, on slide number 11, on information services, the revenue registered MXN 169 million in the Q1 of 2024, down MXN 31 million or 16%. It is relevant to mention that the appreciation of the Mexican peso against the dollar represented a negative impact of MXN 20 million.
Additionally, Valmer, Valmer had non-recurring income of MXN 10 million in the Q1 of the previous year, related to the implementation of a portfolio management system. Excluding these two items, revenue for the Q1 of 2024 were in line with those of the previous year. In Valmer, we have decided to stop commercializing Open Finance, a software for a portfolio management. In annual terms, the sales from this software represented MXN 16.4 million in revenue and MXN 15.7 million in expenses under consulting fees. As a result, we foresee no impact on our financial results. In the future, our focus remains on expanding our presence in North America and strengthening our alliance with the German Stock Exchange to distribute our data in Europe.
We're also targeting new clients like digital banks and fintech companies, which combined with our transition to the cloud and the new distribution model. This initiative has the potential to drive significant progress. All in all, our diversified business model has played once again, an important role in the results. Going forward, we anticipate a shift in monetary policy trends, a more stabilized foreign exchange landscape, and increased activity across financial markets. We continue to hold a positive outlook for 2024. Now, let's look at our operating expenses in slide number 12. Operating expenses in the Q1 were MXN 477 million, up only 1%. I will go over the main items on a year-to-date basis.
Personal expenses up MXN 7 million, or 3%, due to the net effect of annual salary increments at the beginning of the year and lower variable compensation in SIF ICAP. Technology, up MXN 1 million due to higher technology consultancies related to architecture and process management. IT expenses were MXN 7 million lower than expected, due to a strong peso. Depreciation increased MXN 5 million because of the hardware leases for the segregation of post-trade infrastructure and the amortization of completed projects, such as the qualified intermediary at Indeval and enhancements to the financial risk management platform marketed by Valmer. Consulting fees down MXN 3 million, MXN 5 million less due to the cancellation of the portfolio management system that Valmer used to sell, and MXN 2 million up in advisory services.
Others decreased by MXN 5 million because of lower sales of CO2 offsets in Mexico CO2, which is part of SIF ICAP. In the last slide, in the number 13, as a summary, BMV Group delivered resilient recurring results in the Q1 of 2024, impacted by lower average daily traded value in the global market, fewer cross-border transactions, and adverse exchange effect on dollarized services. Net income was recorded at MXN 375 million, in line with the previous three quarters. In a scenario where the exchange rate remains constant in the Q1 of 2023 and the Q1 of 2024, Grupo BMV would have re-recorded an additional MXN 28 million in revenue and MXN 15 million in EBITDA.
Despite facing a turbulent quarter marked by geopolitical conflicts 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. Our capital expenditures in technology during the Q1 of 2024 were MXN 55 million. That is 131% higher than last year, but in line with our investment plans. 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 with financial authorities to advance the approval of our strategic project, notwithstanding the electoral cycle. Currently, our primary focus is the rollout of the central counterparty services for fixed income, beginning with buy and sell transaction of Mexican government bonds.
This initiative leverages our own CCV's financial market infrastructure, which currently only supports equities. We anticipate securing authorization by the end of the Q2 of this year, and aim to initiate operations in the Q4 of 2024. A key prerequisite for initiating operation is ensuring that trading platforms and clearing members are fully authorized and prepared to settle bonds through CCV. On a different note, during the Q1 of the year, we bought back 350,000 common shares under our buyback program, and we intend to maintain this approach going forward. Furthermore, in the previous board meeting, it was 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.
I thank you for the time, and together with my colleagues, we will gladly answer any questions you may have. Thank you.
Thank you.
Thank you.
If you would 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 would like to remove your question from the queue, and for a participant choosing speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Ernesto Gabilondo with Bank of America. Please proceed.
Thank you. Hi, good morning, José-Oriol, Ramón, and Luis René. Thanks for taking my call. I have three questions from my side. The first one is on the pipeline for long-term debt and equities listings. How do you see them ahead of the elections? I was wondering if you are seeing companies, like, on hold or concerned with the local and the US elections. And historically, which has been the month with higher volatility ahead of Mexico's and US elections? Then for my second question is on terms of regulation. So can you remind us how has been the implementation of this new securities law? And when should we start to see the discussions for the secondary law that could help the entrance of multi-asset funds and hedge funds in Mexico?
And then my last question is on operating expenses. Just wondering, how much room do you have to maintain the cost under control? You're having a lot of still strategic projects. So, while we wait for revenues to pick up on the lower rates and revenues in dollars benefiting from the peso depreciation against the dollar, how much room do you have to maintain OpEx under control? Thank you.
... Okay, good morning, Ernesto. The first one on listing, on pipeline. I will say on the listing segment, as Ariel mentioned, this quarter continued the good trend that we had had last year, especially on the debt segment on the long term. Listing revenues were up, short-term placement increased 20%, long-term placements, more than 15% in the quarter. And the stunning outstanding number of long-term debt has also increased from the base numbers that we have had for the last three years, around 485 issuances. So in this quarter, companies from many sectors, FIBRAs, have been active in the market. So going forward, in the next quarter, I think it's going to be a little bit different.
We still have some companies in the road to come to the market, but the pipeline is not as strong as it used to be on the last maybe three or four quarters, on last year. We will have some placement in April, May, but not so many for June, July, as far as we can see. But we think and what we have talked with companies, it makes sense as some of them have anticipated the election process with their debt renewals, and also for new placements that they were seeking. So the pipeline we usually have is diminishing for the following quarter. And we don't see also any IPO in this quarter. Maybe some follow-ons and some CBs and services.
Regarding the second question, the securities market law, well, as it was approved last year, in order to make easier, cheaper, and faster the listing processes, basically through this concept of the Oferta Simplificada. But I want to mention there were some other changes in law which are starting to be used, for instance, companies adopting equity structure with number in shares, and the some other changes to speed up follow-ons and subscription. This was already done by some companies in the process and it was. It make it faster, the process. Regarding the Oferta Simplificada, which is the main topic of the law, last month we were being just working with authorities.
They released to market participants projects of potential changes to this secondary legislation for Oferta Simplificada. And while it was a good start, we, the market participants, including the exchange, we make some comments and changes that we think it will make it simpler and easier, and some criteria that may include a broader number of companies. And up to now, we are still waiting for response back for with the new project from the authorities. But that's the status.
And lastly, Ernesto, good morning. Regarding expenses, we're keeping them, keeping a close eye on them, and, we'll continue to do our best to control expenses and, and to keep the margin. That's, that's, that's our goal. So, if we see, you know, the revenues, not picking up, we'll have to see what we can do for, for in expenses, but definitely there's always, you know, some wiggle room to, to, to control.
Perfect. Thank you very much. Just to follow up-
I-
In terms of the regulations, you were saying that you have been discussing the Oferta Simplificada, meaning to simplify requirements to get new equity listings and debt listings into the stock exchange. But in terms of the hedge funds and multi-asset funds, when do you see this coming through? It will be discussed second half and probably introduced in 2025. Just a little bit of color on that will be very helpful.
Regarding hedge funds, to be honest, I think as far as I know, no big advance has been done on this regulation. All the efforts are focused so far on the Oferta Simplificada. I think this part of regulation for the hedge fund will come after for discussion, after the Oferta Simplificada. I don't think it's going to be this month, at least.
You were also asking about the elections. All in all, we are expecting a positive year in Mexico and for the exchange. Talking about the Mexican economy is doing well, and we think it will continue this year, and at least in relative terms, better than other countries, explained by all the opportunities that we all know on the nearshoring, et cetera. But, and we have seen that, and we did see that in the financing last year.
We did see that in the financing activity that we already mentioned during the Q1, increasing short-term 25%, but also long-term debt compared to the Q1 of last year, 15%, and last quarter, and the Q1 of 2023 was also a very good quarter. We are also seeing that in FIBRAs, we are seeing a lot of activity.
... in FIBRA. As mentioned in the Q1, we had FIBRA Prologis, FIBRA Monterrey, but we are seeing much more activity with other FIBRA, in particular, all the FIBRA that are in on the industrial side. Volatility with the elections, I don't know exactly the month, and it will depend, but usually when we have had elections, either Mexico or U.S. elections have been positive years for us in the equity market. We see more volatility, a bit more of volatility also on the currency side. That is something that will help us on the global market activity.
And we're also positive from the other things that we are doing that have already been mentioned, as the opportunity that we have been working on expanding the services, the current services of our CCP beyond equities, including debt, the electronification of the fixed income market, and also all the investments that we are doing on technology. So all in all, we think that it should be a positive 2024 for the Mexican exchange.
No, super helpful, Oriol. Thank you very much.
Thanks to you, Ernesto.
Our next question is from Jorge Henderson with Santander. Please proceed.
Hi, thank you very much. Hello, Oriol, Ramon, and Luis. Thank you very much for the Q&A space. I have a couple of questions regarding your market data business. You mentioned that you had some hard comps on your information services income, and because of some non-recurring revenues in the Q1 of last year. But also at a sequential basis, this line fell 6% quarter-over-quarter. I also understand that you attribute this partially to the peso strength, as you mentioned in the conference call. But so my question would be: If we remove this exchange rate effect out of the equation, how did you see the structural trend of the information services segment in the Q1? And also, what should we expect going forward for this year and for 2025? That would be my first question.
Hi. Well, regarding this data segment and how to grow, and how are we growing in this year, as Oriol mentioned, information services was down 16% in the quarter. It was mainly due to two factors. First, the exchange rate appreciation accounts for over 10% of that 16%, and the second is non-recurring extraordinary income of Valmer and the data services. These figures are obviously strong, as the data segment has been growing for the last years over in the double-digit rate. But for the quarter, excluding all these items, revenues are close or in line to what we've done in the last year. We have a strategy that we set some years ago to focus on the international expansion.
So at the time, we changed fully the technology platform. We open up the point of presence in New York, expand cloud services and reach Europe, and that allows also to catch up in pricing. All this, and the stability at the time, the peso, as I mentioned, allows us to grow over double digits. So going forward, we still see demand for our product, regardless of what happened in this quarter. We see demand for our products, especially on the POP in New York, on the international customers.
The POP where we are in the data center has close to 5,000 hedge fund brokers, institutional investors, which are potential customers that we are targeting and focusing on. So, there's a pipeline which we think will be coming eventually to connect into the for the data services. We are also focused on other projects, penetration in Europe, as Oriol mentioned, providing historical data, some projects for new infrastructure and connectivity to make it easier for international customers to connect locally on our facilities, the POP, the clouds and data analytics. So, all that, those projects for the next quarters and years will provide us to keep on the growth.
Maybe not as aggressive as this high double digit that we have had in some previous years, but we're positive that we can keep growing on the high single digit, low double digit in the next quarters, years, regardless of the appreciation or not of the exchange rate.
Thanks. Thanks. That's very useful. Actually, I wanted to make a follow-up question on this topic. You mentioned you have a potential of 5,000 brokers, right? For pipelines. And I was thinking that also you mentioned that you see Fintech as new clients. What would be the addressable market going forward, and what kind of services are you offering to Fintechs? Are these Fintechs outside Mexico? I don't know, any detail that you can share on that. And I don't know if you have, like, the current number of clients, and how much can you expand this client base going forward?
It's different. For the local Fintechs, we're offering data services to Valmer, through APIs, to provide them with the information and data that we have on the group of Bolsa, as well as providing services for risk management purposes and also for regulatory compliance. And the 5,000 customers that I refer were in the data center where we are connected in the POP, in New York, the point of presence. That's specifically for the real-time data product for the equity and derivative segment on the market. I mean, that's a huge amount of potential customers.
Not all of them, of course, are focused on Latin or Mexico, so we are doing some efforts on targeting which hedge funds and institutional investors are focused on investing in Latin or emerging markets, including Mexico, so we can better target them.
Okay, thank you very much.
Our next question is from Caio Prado with UBS. Please proceed.
Hello, everyone. Good morning. Thanks for taking my question. I have just one on my side, please, related to the trading in the global market. So we can see that volumes for global markets actually sharply re-reduced, like 50% year-on-year. And this has an impact on custody and so on. So what do you think could be the main reasons behind that drop, especially on the global market? Because when we think the change, when we think about the change regarding the location of trading, it was more related to the local markets, right? So just would like to get a sense from you about what is happening nowadays, and what is the expectation of the company moving forward, if there is any initiative that you are working here to increase volumes, please. Thank you.
Yes, hello, this is Alfredo again. What we've been observing in the market is that the lower trading volumes obviously affect the marketplace in general. So what we're seeing is that also the low volatility that we're experiencing, the low trading between the SIC and the markets they refer to with these arbitrage operations have been lowering because of these effects, low volatility and appreciation of the peso. So this is more a response of low volatility in the peso, peso-dollar exchange rate, and that gives us less participation in the market, in which we have been very active in the past, no?
So what are we expecting, that obviously, as we reach the elections in the U.S. and in Mexico, volatility will start to pick up, interest rates will start to diminish, by the end of this year, and therefore, our main competitor is the interest rate, not necessarily the other exchange. So at this point, what we're expecting is more volatility by second half of this year. Our market share is steady around 82%. And obviously, if we foresee more volatility, participants will choose the venue that has more depth and a better price formation.
Okay, thank you very much. And just a follow-up, as you mentioned about the market share trends. After the recent regulatory change, the last one that you had, we saw that you lost some additional market share, but seems that it is stabilizing nowadays. So just to like, like to have a sense from you, if you are witnessing any potential new change in the regulatory framework regarding the competition with BIVA, or if you are seeing any aggressive movements from BIVA today in any specific revenue line. So a quick overview would be good to hear. Thank you.
At this point, we are dealing with the August 22, 2022 regulation. At this point, probably the authorities are revising to improve that regulation, which is not necessarily very competitive for all the marketplace in general. So at this point, we believe that there could be improvements that could benefit the whole marketplace and in order to attract more participants from abroad, because obviously, if you have a not very clear regulation in terms of trading, participants will step out from Mexico, go to Brazil, no? So at this point, what we are expecting is a better regulation. Probably, it will be hard to see this regulation come out before the elections. But at this point, we're not depending on that to be competitive.
We have been very active in providing the marketplace a good service, liquidity, and obviously, opportunities in several trading features that we have in place, no?
The competition, the local competition we have, is not just in the cash equity trading. It is also on the financing side.
...And, and here we also have pretty good news. We have been gaining back market share. And just to give you two numbers on debt, on short-term plus long-term in number of issuances, we had in the Q1, 96% of the issuances, local issuances in the market. In terms of amount, it was a bit lower, but a pretty good number. The financing amount at the Bolsa was during the Q1, 93%. So 96 and 93, so I think that's pretty good number, and we continue to gain back market share.
Okay, excellent. Very clear. Thank you very much.
Our next question is from Carlos Gomez with HSBC. Please proceed.
Hello, and good morning. I have two questions. The first one refers to the proposed pension reform, and whether you think that that could have any impact in the company in the short, but also in the medium and long term? Second, I mean, we keep talking about the influence of the foreign exchange on your business. Would you consider at some point any type of hedging measure, or you prefer to have the natural exposure that you already have to the currency? Thank you.
Okay. So on the pension reform, it started at the beginning of 2023, and we're already starting to see the benefits of that. You can see that on Indeval, on, under the assets under custody. That number is up not only because of this, also because of a bit more, securities on the global market as well as on the, on the local market. But the number is up 12% year-over-year. And we will continue to see this behavior going forward. We expect this to continue over the next six years. The, pension funds or AFORES, will double in size, and well, they will have the need to invest those assets, through the exchange.
So first, it's an opportunity on the securities depository on Indeval, but it's also an opportunity that we have on the other divisions, on capital formation, to get more products listed or to get a bit more traction on the trading clearing and the full stock cycle. So it's a gradual improvement, but you'll continue to see this under Indeval, under the custody.
Carlos, on your second question, whether we're considering an FX hedge, yeah, we've begun to think about it, or we're not, we have a natural long position, we generate U.S. dollars. I think what we're seeing-
Thank you.
It is a rather extraordinary behavior of the Mexican peso. We've never seen the Mexican peso so strong for such a long time. Oriol here likes to make fun of people who have bought U.S. dollars. But, you know, yes, we're thinking about it, but we haven't made a decision on that yet. Okay, that's clear. And on the pension reform, I was actually thinking, I mean, it's clear the positive impact of the pension reform that came into effect last year. But also you have this minor one this year with the Pensión del Bienestar
I think this, we have to see how that plays out in court. It's something that's more of a banking regulation, what you do with dormant accounts. So we're not expecting any specific, you know, impact to our market, to our market, to the Bolsa. But it's, we have to see how that plays out, plays out in the end. You know, there is some understanding as to what, what's the best use of dormant accounts, but you have to decide what's the best use of the proceeds and who is the owner of those proceeds. But we'll have to wait and see how that plays out in the courts. But no specific direct impact on us, I think.
Thank you. That's clear. Thank you so much.
Our next question is from Edson Murguía with Summa Capital. Please proceed.
Hi, good morning. Thank you for taking my question. The first one is a follow-up on global market, ADTV, because if you compare with the other banks or even other financial institutions during this Q1, trade and revenue actually increased. And the VIX, the volume volatility indicator, was up during the quarter. So, I was wondering if there is another reason than in the global market, we saw a decrease in the ADTV, because I am not following. Or perhaps it's something related to more customers are trading in the U.S. rather than Mexico, or there is. There has to be another reason, not only the FX. That will be my first question.
My second question is regarding on the project that Oriol mentioned about, this inaudible project in service, and if I got it correctly, the CCV. So could you explain a little bit more, what efforts are you following or trying to do for the next couple of years? Trying to understand the stage of this project. Thank you.
Yes, at this point, what investors are looking is buy and hold. Obviously, this is a complex year in terms of elections, and obviously the, the, the wars have been, a major player in decision making. There has been flight to quality, and obviously all emerging markets are suffering from the same situation. Mexico is not the only marketplace in which volumes have gone down. And the FX obviously has other implications. Valuations also are affected by a lower-- by a stronger peso. And, there are a lot of alternatives. As I said before, our main competitor is not the other exchange, is Brazil, when regulation is not in place in Mexico, and high interest rates.
So when the marketplace starts to suffer from not a good regulation in terms of best execution, and obviously we are facing this low volatility in the market, we are expecting this lower volume.
And I think, Edson, that in addition to the effects, it is also the performance. If you look at the SIC, the most active ETFs that are traded in the global market are highly related to the FX. So are more FX trades than an equity trade, as are the case of the short-term U.S. treasuries that have ETFs and are used as an exchange rate play. However, on the performance side, I think that this is also having an impact. It had an impact on the positive side, as most of the companies that are technology disruptive companies had a very good performance, but have been having some corrections.
I think that this has also been reducing the traded volume, in addition to the strong peso and stability on the lower volatility on the exchange rate.
Okay. And regarding to my second question?
On the central counterparty, what we've been working on, as Oriol mentioned, is on developing this capacity for bond trading. So what we will be expecting to get the approval from authorities just for direct transactions, buy and sell, by this quarter. That means that we will be ready to provide the service, but we still need to continue working with the clearing members and with brokers, voice brokers and electronic trading brokers, so that we can connect and we can create and make this new service to work in the market. In addition, the plan is also to add clearing for repos, and one thing that we just saw...
Repos, yes, that would be critical and relevant for the market regarding efficiencies for back office and also the capital. They will have relevant savings by not having the need to issue capital, because one of the benefits of central clearing of repos is that it reduces some of these requirements. And we just saw that the US will make the central clearing mandatory for next year. So that is something also-
Mm.
-that will help, I believe, in the coming months to get this new service up and running and getting more traction by next year.
Okay. So just joining the dots. By the Q2, 2024, you might get the approval from the Mexican authorities, and operationally, it will start in the Q4, but it's only be fixed income, right? Bonds and so on. But for those parts of repo and technology, it's gonna be another stage, looking ahead for this mandatory requirement for the next year. Am I getting it right?
Yes. The approval should be this quarter.
Okay.
Operationally, third, Q4 this year. And repos, the idea is to develop in this year and be ready for next year, and we will certainly follow what will be implemented in the U.S. And with the impact, the positive impact that they will have, mostly the seven largest banks in the country, I think that they will be more than glad to participate in this.
Okay. Thank you so much, Oriol and Ramon, and all the C-suite in the call.
Thank you.
Thank you.
Our final question is from Yuri Fernandes with JP Morgan. Please proceed.
... Thank you, guys. I had a quick one regarding the one-off trading gains you had, like, if you can provide some more color on the, on the trading, like the MXN 7 million you put in the release. A second one, also quick on pricing. In 2019 and in the past year, we saw some changes on listing, maintenance, like there were pricing changes for Bolsa. My understanding is that you need approval for price changes, like you need to have CNBV approving those changes. But just checking the box, like anything that you can do on pricing to kind of help on revenues.
I understand volumes are challenging, I understand you are doing—you have a good cost control that are trying to create new products on data services and others. But what about pricing? What can you tell us here? What can you do? Or maybe it's not something that's your attention at. Thank you very much.
Yuri, regarding the one-off in revenues we had for MXN 7 million. They are 2023 revenues that were billed in 2024, related to services for some brokers. So it's just has to do with the tax effect, and some brokers asked for the delayed billing of some services. And regarding the listing and maintenance fees, we were not currently looking at changes in pricing. It's a process that's done with the authorities, but we're not analyzing that yet.
Okay, thank you very much.
Thank you.
We have reached the end of our Q&A session. I would like to turn the conference back over to management for closing remarks.
Yes, thank you very much once again for attending our quarterly conference call. Thank you very much for the interest and your questions. If you need something else, you have our contact information. Have a great day. Thank you.
Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.