Freight derivatives include exchange-traded futures, swap futures, preferential freight agreements (BSAs), container freight swaps, container freight derivatives and physical freight derivatives. FAs are traded either in the form of futures contracts or options for different expiry days on the futures curve from the first month and up to six calendar years. The instruments are billed with various freight rate indices published by the Baltic Exchange and the Shanghai Shipping Exchange. On the other hand, cleared contracts are daily through the designated clearing house. At the end of each day, investors receive or owe the difference between the price of paper contracts and the market index. Clearing services are offered by leading exchanges, including nasdaq OMX Commodities, the European Energy Exchange and the Chicago Mercantile Exchange (CME), to name a few. Through Clarkson Platou Futures, we offer shipowners, banks, investment firms and other institutions that wish to manage freight risk by increasing or reducing risk, Forward Freight Agreement (FFA) brokerage services and specialized intermediation services for commodity derivatives traded under the Forward Freight Agreement Broker Association `FFABA` (FFABA) standard contracts. The main terms of an agreement include the agreed route, the settlement date, the size of the contract and the rate of compensation for differences. As maritime markets present another risk, cargo derivatives have become a viable method for shipowners and operators, oil companies, commercial enterprises and grain houses to manage freight rate risk. The Baltic Exchange in London presents the Baltic Dry Daily Index as a market barometer and a leading indicator of the maritime sector.
It offers investors insight into the price of offshoring important commodities by sea, but also contributes to the pricing of freight derivatives. The index includes 20 navigation routes measured from time maps and covers different bulk carriers of different sizes, including Handysize, Supramax, Panamax and Capesize. FFAs are financial instruments traded on a principled basis, mainly against the averages of the on-time charter for the Capesize, Panamax, Supramax and Handysize vessels. Our dedicated freight options team is also able to offer a full range of option strategies tailored to individual customer needs. A shipowner uses the index to monitor and protect a drop in freight rates. On the other hand, charters use it to reduce the risk of increased freight rates. The Baltic Dry Index is considered a leading indicator of economic activity, as an increase in bulk shipping indicates an increase in high-growth raw materials. Freight derivatives are financial instruments whose value is derived from future freight rates, such as.B. Dry bulk transport rates and tanker rates. Cargo derivatives are often used by end-users (ship owners and grain houses) and suppliers (integrated oil companies and international trading companies) to reduce risk and guard against price fluctuations in the supply chain. However, as with any derivative, market speculators – such as hedge funds and retailers – are involved in both buying and selling freight contracts that offer a new, more liquid marketplace. Forward Freight Agreements (FFAs) is a commodity derivative from the underlying physical maritime markets.
In a volatile market, FFA companies have the opportunity to manage their freight risk. They also provide a mechanism for companies to take price risks by engaging in global trade and are an important part of maritime markets. Freight futures are financial contracts with standardized features, such as certain expiration dates, which are cleared in a regulated financial exchange and with standardized lot sizes – normally a day or 1000 mt is the clip of the minimum trade. HABITATS were developed in the early 1990s for navigation.