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Forward Freight Agreement Baltic Exchange

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. To learn more about our stock exchange partners and clearing members, click here. 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. Fair play, the weekly shipping magazine founded in 1883, which will unfortunately publish its last issue and close its doors next month, comes out of a firecracker. It has published a special report on how the Sustainable Consumer Agreements (FFAs) market, which uses the Baltic Exchange as an index, is influenced by changes to IMO regulations on low-sulphur fuels. This is a long, in-depth and important article, but the question it encompasses is how the index will calculate the cost of fuel for both heavy fuel oil and low-sulphur fuel in its benchmarking could be crucial for the FFA market. The FFA community and the Baltic Exchange are currently at odds and, the article concludes, “the story of IMO`s impact on freight derivatives in 2020 has only just begun.” 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, given that an increase in bulk shipping indicates an increase in raw materials driven by growth.. .

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