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SGX PARTNERS WITH BALTIC EXCHANGE FOR FORWARD FREIGHT AGREEMENT
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The Singapore Exchange (SGX) today announced that it has signed an agreement with Baltic Exchange whereby the Baltic Exchange will provide its benchmark prices for the settlement of Forward Freight Agreements (FFAs) for dry bulk and wet tanker dirty routes cleared on SGX OTC Clearing. It will also provide its forward curve price assessments to facilitate accurate margin calculation.
This collaboration supports SGX's efforts in developing its clearing facility for a wide suite of over-the-counter (OTC) FFA products that meet the needs of commodity trading and shipping participants. It aligns the SGX OTC FFA clearing services with industry practice.
Mr Seck Wai Kwong, Senior Executive Vice President and Head, Strategy and Business Development Group of SGX said, "We are delighted to develop this partnership with Baltic Exchange, the leading international freight price assessment and benchmark provider. The use of Baltic Exchange's freight benchmarks is very important for SGX's clearing of Forward Freight Agreements as it is well recognised by FFA market participants."
Mr Jeremy Penn, CEO of Baltic Exchange, said, "We are pleased to collaborate with the Singapore Exchange in providing our prices for its settlement of FFAs and forward curve rates for the management of margins. Singapore is strategically-located in its region as an important maritime centre, and this development of a clearing facility for FFAs should further enhance freight derivatives trading and risk management activities in Asia."
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Notes:
Forward Freight Agreements (FFAs) are over-the-counter products made on a principal-to-principal basis for trading specified time charter and voyage rates for forward positions.
Singapore Exchange Limited
Singapore Exchange Limited (SGX) is Asia-Pacific's first demutualised and integrated securities and derivatives exchange.
SGX was inaugurated on 1 December 1999, following the merger of two established and well-respected financial institutions – the Stock Exchange of Singapore (SES) and the Singapore International Monetary Exchange (SIMEX).
On 23 November 2000, SGX became the first exchange in Asia-Pacific to be listed via a public offer and a private placement. Listed on its own bourse, the SGX stock is a component of benchmark indices such as the MSCI Singapore Free Index and the Straits Times Index.
For more information, please visit SGX website: www.sgx.com
The Baltic Exchange
The Baltic Exchange is the world's only independent source of maritime market information for the trading and settlement of physical and derivative contracts. Its international community of over 550 members encompasses the majority of world shipping interests and commits to a code of business conduct overseen by the Baltic. Baltic Exchange members are responsible for a large proportion of all dry cargo and tanker fixtures as well as the sale and purchase of merchant vessels. Commissions from chartering and sale and purchase in 2004 amounted to more than US$½ billion.
Baltic Exchange services
- Independent, high quality dry, wet and gas freight market information
- Self-regulated chartering, sale and purchase and freight derivatives markets
- Central forum for competing freight market interests
- Framework ensuring high standards of business practice and co-operation
- London-based business facilities for members
- A collective voice for members worldwide
Shipping market information
The Baltic Exchange provides the shipping market with the following information:
- Six daily indices covering capesize, panamax, supramax dry bulk carriers and tankers carrying
clean and dirty products
- 45 separate route assessments
- Mark-to-market information
- Four dry cargo reports
- Second-hand ship values
- Ship demolition values
- Daily dry cargo fixture list
Self-regulated market
The Baltic exercises a light-handed supervision of the shipping market through a self-regulatory process and expects its members to conduct their business within a set of defined guidelines and work practices encapsulated in its 260 year old motto "Our Word Our Bond".
For more information, please visit Baltic Exchange website: www.balticexchange.com
Issued on: 2 May 2006
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