Baltic Exchange provides online bourse for trading dry bulk derivatives

THE Baltic Exchange, or Baltex, has opened online trading in dry bulk derivatives, signing on Cargill, Morgan Stanley, Toepfer, and shipping hedge fund M2M Management, with Cargill being the biggest player, accounting for 200 million tons.


Supervised by Britain's Financial Services Authority, Baltex provides Forward Freight Agreement (FFA) prices and online execution, reported Newark's Journal of Commerce. It supports straight through processing to the international clearing houses, LCH in London and Oslo's NOS, with Singapore's SGX with the Chicago Mercantile Exchange expected to be added soon, said the report.


Baltex took three years to develop the market mechanism and faced resistance from brokers who relied on telephones to make 95 per cent of trades in FFAs.


"The shipping, financial and commodity sectors now have a centralised, transparent and regulated marketplace in which dry freight derivatives can be traded," said Baltic Exchange chairman Mark Johnson. "We expect Baltex to attract new companies in the coming months and support greater liquidity in the FFA market,"


The new screen-based trading system faces competition from Singapore's Cleartrade Exchange, which opened on June 2 pricing freight, iron ore, steel and fertiliser derivatives.
(Source:http://www.schednet.com)