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Freight derivative - Wikipedia, the free encyclopedia A Freight derivative is a financial instrument for trading in future levels of freight rates, primarily for dry bulk carriers and tankers. Cleared freight futures contracts are traded on the Oslo based exchange Imarex (International Maritime Exchange ASA) and also, more recently, the New York Mercantile Exchange and London-based LCH.Clearnet. Freight derivatives are primarily used by shipowners and operators, oil companies, trading companies and grain houses as tools for managing freight market risk. en.wikipedia.org /wiki/Freight_derivatives   (148 words)

Derivatives market - Wikipedia, the free encyclopedia The market can be divided into two, that for exchange traded derivatives and that for over-the-counter derivatives. The UK reinforced its position as the leading derivatives center with its share of turnover rising from 36% to 43% during this period. Derivatives based on foreign exchange contracts also form an important sphere of activity as do equity-linked and commodity contracts. en.wikipedia.org /wiki/Derivatives_market   (443 words)

Futures contract: contract future interest rate, commodity contract future, contract future hedging There are many different kinds of futures contract, reflecting the many different kinds of tradable assets of which they are derivatives. In modern (financial) markets, "producers" of interest rate swaps or equity derivative products will use financial futures or equity index futures to reduce or remove the risk on the swap. The social utility of futures markets is considered to be mainly in the transfer of risk, and increase liquidity between traders with different risk and time preferences, from a hedger to a speculator for example. wikipedia.pavelreich.com /wiki/Futures_contract   (2310 words)

CL&M -- Forward Freight Agreements Derivatives are risk management tools, the value of which is derived from the value of an underlying asset. Freight derivatives serve as a means of hedging exposure to freight market risk by providing for the purchase and sale of a freight rate (the “contract rate”) along a named voyage route (the “contract route”) over a specified period of time (the “contract period”). The freight derivatives market began with the trading of voyage rates for certain “dry” cargo routes in the early 1990’s and later was expanded to include “wet” tanker routes. www.clm.com /pubs/pub-6075267.html   (1324 words)

Commodity Trader | Reality of freight futures The Baltic Freight Index, a basket of spot freight rates designed to reflect the daily movement in rates across a wide selection of dry bulk spot voyage and time charter rates, was used as the standard for settling contracts. He believes the derivatives market is now bigger than its physical counterpart, pointing out that this is normal for mature derivatives markets, such as for bonds or commodities like grain and crude oil. But, the freight derivatives market is very illiquid and when the real market moves suddenly and quickly, parties holding paper can find themselves locked into either major gains or major losses. www.commoditytrader.com /archives/000053.php   (1235 words)

Alexander's Gas & Oil Connections - Paper trading now also for tanker freight market It is now the turn of the tanker freight market to try to emulate the dry cargo freight derivatives success which has reached an annual world-wide turnover of $ 1 bn. Despite its eagerness to promote tanker freight derivatives and plenty of apparent interest, the SSY team is unsure of the real potential of this venture. He believed that freight would become a more important factor of the overall cost of oil, alluding especially to the recent drop in the Brent crude oil prices which had made freight a bigger portion of the risk. www.gasandoil.com /goc/reports/rex81449.htm   (1250 words)

EPRM Article   (Site not responding. Last check: 2007-11-01) Forward freight agreements (FFAs) are an essential tool for oil majors looking to maximise their profits, but the market is still in its infancy, says John Banaszkewicz, director at Simpson Spence and Young (SSY) Futures, a broker based in London. The experience of the last few months has shown that freight prices are extremely volatile at the moment.” On a typical route between the Arabian Gulf and Japan, increases in freight prices added more than $0.80 to the cost of transporting a barrel of oil between November 1999 and April 2000 (see table). LevelSeas.com says that its freight derivatives branch, which is due to launch in the third quarter of 2000, will cover both dry and wet bulk. www.riskwaters.com /eprm/eprm/june00/freight.htm   (1304 words)

Turnover in exchange traded derivatives up 22% in 2005 says IFSL Global derivative markets continue their relentless rise with the notional value of turnover in exchange-traded derivatives rising 22% in 2005, following a 31% increase in the previous year. London is also a major centre for niche OTC derivatives markets, such as credit, energy, and freight derivatives, that have grown rapidly in recent years. Credit derivatives tripled between 2002 and 2004 while freight derivatives rose fourfold between 2002 and 2005: 45% of credit derivatives are transacted in London. www.finfacts.com /irelandbusinessnews/publish/printer_1000article_10005178.shtml   (290 words)

Oslo Børs :: Selskapsmeldinger Imarex estimates that the future size of the freight options market could match the current size of the freight futures market, thereby increasing overall the size, and potentially the value of the entire freight derivatives market. Imarex Freight Options are a way to gain from a movement in a freight price without actually purchasing freight or a freight futures contract outright. The market for freight options is moving fast, and Imarex estimates that the value of the freight options market could match the value of the freight futures within a relatively short time period. www.newsweb.no /index.asp?melding_ID=107879   (935 words)

Airline - Wikipedia, the free encyclopedia Not only must they purchase (or lease) new airline bodies and engines regularly, they must make major long-term fleet decisions with the goal of meeting the demands of their markets while producing a fleet that is relatively economical to operate and maintain. Compare Southwest Airlines and their reliance on a single airplane type (the Boeing 737 and derivatives), with the now defunct Eastern Air Lines which operated 17 different aircraft types, each with varying pilot, engine, maintenance, and support needs. A second financial issue is that of hedging oil and fuel purchases, usually second only to labor in its relative cost to the company but with the current high fuel prices it has become biggest part of total airlines expenses. en.wikipedia.org /wiki/Airline   (4478 words)

GARP : Risk News : Risk eNews Article   (Site not responding. Last check: 2007-11-01) The use of freight derivatives soared last year as dry and wet commodities' dealers and shipping companies moved into derivatives to manage risk against very volatile prices. The Singapore Exchange's clearing house for energy derivatives and freight futures attracted the signatures of banks including Goldman Sachs, HSBC and Barclays Capital. The freight derivatives market though has seen a number of growing pains with more brokers than customers in some segments and a row over rights to information on freight rates supplied to the Baltic Exchange. www.garp.com /risknews/newsfeed.asp?Category=14&MyFile=2005-10-04-11568.html   (460 words)

Imarex A freight derivative is a financial futures contract between two parties, which sets an agreed future price for carrying commodities at sea. Exceptionally high volatility in the price of freight, means that in the physical underlying markets - which are the world shipping markets, natural buyers (refiners, importers, traders etc) have to take into account a high risk of price movements in freight when calculating the cost of transport. On Imarex, Principals (those trading directly for their own account) trade freight derivatives electronically on screen in real time, or via an Imarex Exchange Broker in Oslo or Singapore. www.imarex.com /education/about_freight_derivatives   (243 words)

The Baltic Exchange - New chairman for Baltic freight derivatives brokers Andy Lucey of UK freight derivatives broker, Freight Investor Services, has been elected as the new chairman of the Forward Freight Agreement Brokers' Association (FFABA) for 2004. The price increases in freight rates over the past year, but especially the last 4 months, has brought freight to the attention of a new trading community who have subsequently come to realise that freight is a manageable and tradable commodity. Control of responsibility for Baltic freight market information lies with the Freight Indices and Futures Committee (FIFC), which is made up of five Baltic Exchange directors and in turn reports to the Baltic Board. www.balticexchange.com /default.asp?action=article&ID=574   (629 words)

Futures Industry Association | FI Magazine Home Freight forwards, which essentially are cash-settled forwards based on the shipping rates for ocean freight, are traded primarily over the counter, but a number of market participants are pushing for a clearing solution as a way to reduce counterparty risk. Freight forwards, particularly those based on the shipping costs for oil tankers, have been very sensitive to any factors affecting the supply and demand of crude oil, and this has created many opportunities for arbitrage. The freight derivatives market has been extremely active over the last 12 months, but it is still a very young market. www.futuresindustry.org /fimagazi-1929.asp?iss=161&a=1069   (2452 words)

Bloomberg.com: Commodities Derivatives are financial obligations whose value is derived from underlying assets such as debt and equity securities, commodities and currencies. Customers of the Edinburgh, Scotland-based bank have grown more interested in freight derivatives because of this year's surge in trading, said a spokesman who declined to be identified. By buying freight derivatives in February, they could have locked in rates to ship 150,000 metric tons of coal from South Africa to Rotterdam, Europe's biggest port, at $28.50 a ton, more than twice the levels of five months later, according to International Maritime Exchange AS in Oslo. www.bloomberg.com /apps/news?pid=10001013&sid=abU9C6jyWjAA&refer=commodity_futures   (1022 words)

Forward Freight Agreements (FFAs) and Shipping Derivatives: Risk Management Tools for Shipping - Market Research ... Shipping initially regarded the derivatives sector with considerable scepticism but it could now be on the threshold of a great leap forward. The forward freight market is an evolving arena; neither perfect nor in its ‘finished state’. Derivatives trading might be viewed as a hedging exercise — however, perfect hedges seldom occur. www.bharatbook.com /detail.asp?id=6335   (1252 words)

Capital Shipbrokers Ltd. Capital Freight Derivatives Ltd. was incorporated in February 2003 to service the rapidly emerging market in freight forward contracts. As the market is increasing in size with new companies joining all the time, Capital Freight Derivatives is also able to provide consulting services to help new entrants establish their trading platforms. The freight forwards team is fully integrated with Capital Shipbrokers’ spot, time charter and sales and purchase departments. www.capital-shipbrokers.co.uk /freight_derivatives.html   (152 words)

Risk magazine - Freight market hits credit rocks Known as forward freight agreements (FFAs), freight derivatives have become popular in the past 12 months as the spot market cost of shipping cargo worldwide has risen sharply. Standardised contracts have evolved to meet this demand, both for ‘wet freight’ (such as oil) and ‘dry freight’ (such as steel, coal and soft commodities), with additional specifications for the route and size of vessel. Largely intermediated by freight and ship brokers, but now attracting banks as well, the market is estimated to be at least $30 billion in size. db.riskwaters.com /public/showPage.html?page=199622   (1038 words)

GARP : Risk News : Risk eNews Article   (Site not responding. Last check: 2007-11-01) An over-the-counter clearing facility for oil and freight derivatives has been officially launched in Singapore. The launch is timely, given the recent volatility in the energy and freight markets. Trading in freight derivatives grew at an average annual rate of 50 percent for the past 5 years. www.garp.com /risknews/newsfeed.asp?Category=6&MyFile=2006-05-18-12827.html   (274 words)

Maritime London | news & events | summary   (Site not responding. Last check: 2007-11-01) GAfter reaching a record high of 1.2bn tons last year dry freight derivatives trading volumes may have fallen back slightly in 2005, settling at 1.1bn tons, and ending six years of break-neck growth during which volumes have increased six-fold. Looking at the derivatives market the report, “The International Dry Freight Market”, says the main trends in recent years have been: • A general shift towards time charter contracts, which are settled against trading prices throughout the contract’s life, and away from voyage contracts. Mr Perret says the derivatives broker segment has witnessed radical changes since 2003, noting: “Before that year, traditional physical market brokers who had set up a derivatives desk alongside their core operations were the only key broking players. www.maritimelondon.com /london_matters/12december05_main.shtml   (2470 words)

NOS The number of members in the freight derivatives market increased by 34 percent and the number of cleared transactions increased by 20 percent from 2004. Following consultation with freight derivatives principals, OTC brokers and Imarex, NOS is pleased to introduce a clearing-only fee for OTC conversions of all freight futures contracts. The bunker fuel oil derivatives market is worth in excess of USD 60 billion per year with as many as 25,000 transactions taking place annually. www.nos.no /frontpage.asp?sitecode=2   (1621 words)

Norton Rose - MiFID scope   (Site not responding. Last check: 2007-11-01) Other OTC commodity derivatives which are physically settled, which are not for commercial purposes, and which have the characteristics of other derivatives having regard to certain factors such as the existence of clearing and margining Commodity derivatives will be classified as a financial instrument for the first time (firms which belong to non-commodity groups, such as banking groups with commodities arms, will be the main firms that feel the effect of this change). An important area where MiFID expands on the scope of the ISD is that of derivatives, including commodity and credit derivatives, and others such as derivatives on freight rates, emission allowances, or economic statistics. www.nortonrose.com /html_pubs/view.asp?id=5055   (749 words)

Hedge Fund Street: A new shipping hedge fund to be launched by Clarkson But what you perhaps didn’t know is that the freight derivatives market has grown rapidly in recent years. He added that the freight derivatives market has grown rapidly in recent years. Freight derivatives enable investors to hedge the risks of volatile prices in shipping costs. www.fundstreet.org /2005/11/a_new_shipping_.html   (445 words)

Commodity XL for Freight Freight has grown from a cost of doing business to a market opportunity in and of itself. Use freight derivatives to hedge physical positions, and produce improved overall performance. Even the most complex "what if" analyses and trading alternatives can be generated and analyzed with Triple Point Commodity XL for Freight. www.tpt.com /freight.asp   (326 words)

Spectron - London Energy Brokers' Association   (Site not responding. Last check: 2007-11-01) Firms booking speculative OTC energy derivatives from UK offices need to be aware of the regulatory risks that apply to their business. Firm A, a London-based freight derivatives trader, books an OTC deal with Firm B, a French corporate. Firm B is hedging its underlying freight risk, but Firm A is taking a speculative position on the direction of the market. www.spectrongroup.com /europe/leba.asp   (866 words)

Bloomberg.com: Europe NOS ensures payments to traders of so-called Freight Forward Agreements, or FFAs, which are tied to transport costs of commodities such as oil and coal. Shipping companies, cargo owners and banks use freight derivatives to speculate or protect against swings in shipping rates that can cost them money. Freight derivatives first traded about 20 years ago under the Baltic international freight futures exchange contract, or BIFFEX, on the London International Futures and Options Exchange. quote.bloomberg.com /apps/news?pid=10000085&sid=a_B6i1nGgmWA&refer=europe   (649 words)

BRS FUTURES LIMITED   (Site not responding. Last check: 2007-11-01) The last few years have seen substantial growth in the use of derivatives to reduce and manage exposure to risk in many markets. The international shipping market is no exception, and in response to clients' needs, BRS has added freight derivatives to the range of services it provides. The company offers a broking service in existing tried and tested contracts for freight swaps and options, and aims to continue developing its range of freight and ship value-based derivative products as appropriate. www.brs-futures.com   (234 words)

The World Factbook 2004 - Notes and Definitions In the Economy section, GDP dollar estimates for all countries are derived from purchasing power parity (PPP) calculations rather than from conversions at official currency exchange rates.      Cocaine is a stimulant derived from the leaves of the coca bush.      Poppy straw concentrate is the alkaloid derived from the mature, dried opium poppy. www.brainyatlas.com /docs/notesanddefs.html   (8880 words)

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