The FFA information and trading system will offer a real time environment for trading FFAs. These contracts provide a means of hedging exposure to freight market risk through the trading of specified time charter and voyage routes for forward positions.
Incorporated within balticexchange.com, the Exchange's electronic " Floor" which was launched in August 2001 and facilitates the matching of ships with cargoes together with a number of other functions, the FFA system has been approved by the Financial Services Authority. It has been developed in close co-operation with the Forward Freight Agreement Brokers' Association (FFABA), an organisation which represents the world's major FFA brokers.
Speaking at the launch of the new facility at a seminar at the Exchange today, Jim Buckley, Chief Executive of the Exchange said:
"The launch of the FFA information and trading system represents a further milestone in our development strategy. We have worked closely with the FFABA in recent months to refine the system to meet the requirements of its members and to test the system rigorously."
He continued:
"The system will offer users a unique ' click-to-trade' facility and provide comprehensive coverage of the market and live links to the Exchange's internationally respected route rates and freight market indices."
All the indices and route rate assessments which are published daily by the Exchange will be traded on the new system covering both the wet and dry cargo markets. The number of companies subscribing to the new FFA system - presently 50 - is expected to grow over the next 12 months and they are likely to include financial institutions and commodity trading houses.
Authorised FFABA members will use the FFA trading system and principals will be able to view and download information on the most recent trades and historical data on positions. Annual subscriptions for principals who are Baltic members have been set at £1,000 per screen while the subscription rate for brokers will be £2,000 per screen.
The volume of FFA business has been growing steadily and it is estimated that last year there were between 2,500 and 3,000 transactions while the market is estimated to have grown by about 25 per cent between 1995 and 2000.
