Forward Freight Agreement (FFAs)
- Contract Specifications
- Execution Fee
Forward Freight Agreements (FFAs) are financially settled derivatives contracts (with no physical delivery) settled against the monthly average of different daily indices for dry bulk freight costs published by the Baltic Exchange in London.
After recent sharp declines, the dry bulk freight market is poised to improve gradually over the next couple of years to compensate for the over correction in freight rates. The freight market is seeing a relatively strong demand since steel demand appears to be back on track and China iron ore demand remains strong in 2013. However, overcapacity in the market still keeps the freight rates under pressure. As the volatility of freight rates is enormous, hedging can have a significant effect on one’s portfolio.
FFAs offer ship owners and operators, charterers and traders a means of protecting themselves against the volatility of freight rates. FFAs also provide protection for financial investors with exposure to actual freight, which moves up and down in tandem with global demand for raw materials and basic commodities such as iron ore, coal and grains.
CLTX aims to provide a neutral venue for this demand and bring new participants and liquidity to the market. For more details, please find our latest Freight product brochure.
Dry Freight Futures: Contract Specifications Time Charter: CTC, CPT, PTC, STC, HTC
Time Charter Trip: P1A, P2A, P3A, P1E, P2E, P3E
Voyage: C3E, C4E, C5E, C7E Lot size 1 Day 1,ooo Metric Tonnes Minimum Tick US$25 US$0.01 Currency US Dollar Forward Curve In respect of daily settlement, the floating price will be the end of day price as supplied by the Baltic Exchange. CTC, CPT, PTC, STC, HTC, C3E, C4E, C5E, C7E, P1E, P2E, P3E: In respect of final settlement, the floating price will be the mean of the daily Baltic Exchange spot price assessments for every trading day in the expiry month. P1A, P2A, P3A: In respect of final settlement, the floating price will be the mean of the last 7 Baltic Exchange spot price assessments in the expiry month. Index Provider Baltic Exchange Contract Series CTC, CPT, PTC, STC, HTC: Months, quarters and calendar years out to a maximum of 72 months C3E, C4E, C5E, C7E, P1A, P2A, P3A, P1E, P2E, P3E: Months, quarters and calendar years out to a maximum of 36 months Expiry At 18:00 hours (UK time) on the last business day of each month within the contract series.Exception – December Contracts will expire on 24th December or previous business day as there is no publication of an index in the week prior to New Year. Settlement At 13:00 hours (UK time) on the last business day of each month within the contract series Clearing House LCH, SGX, NDQ
Trader Membership Fee Free Screen User Fee Free Fee Basis Per Day or Metric Tonne Fee Value % of notional value Volume (lots/month) Effective Rate 0 – 250 0.10% 251 – 500 0.08% More than 500 0.06%
*General Terms of business
1) CLTX reserves the right to modify prices
2) Prices published serves as a point of reference and fees may vary across different market participants.