Following extensive discussions with market participants, including at the Freight Market Information Users’ Group meeting on Wednesday 20th May, the Baltic is pleased to announce the following plan. Should any participants in the dry bulk or dry FFA market have any questions they wish to raise please contact firstname.lastname@example.org.
172 4TC is used below to refer to the equally weighted average of C8_03; C9_03; C10_03 and C11_03
180 5TC is used below to refer to the unequally weighted average of the C8_14 (25%);C9_14(12.5%); C10_14(25%); C14(25%) and C16(12.5%)
180 4TC is used below to refer to an equally weighted average of C8_14; C9_14; C10_14 and C16
From 3 August 2015 to 23 December 2016
The published daily rate for the 172 4TC will be derived from the 180 4TC at a constant dollar differential.
The differential will be established and published on 31 July 2015 by reference to the average difference between the panellist-reported 172 4TC rate and the 180 4TC rate for the preceding 12 months .
Each reporting day from 3 August 2015 to 23 December 2016 (the last index day of 2016) the fixed differential will be applied to the 180 4TC to provide the daily rate for the 172 4TC. Reporting by panellists on the 172 4TC routes will cease on 31 July 2015.
Monthly FFA settlement rates for the 172 4TC and the 180 5TC will be calculated from the daily published rates in the usual way.
The Baltic will therefore cease panellist-based reporting of the 4 timecharter routes for the 172 Baltic Capesize vessel from 31 July 2015.
From 2 January 2017 until all relevant FFA open interest has settled
The published daily rate for the 172 4TC will be at a fixed dollar differential to the 180 5TC.
The dollar differential will be established and published on 31 July 2015 by reference to the average difference between the panellist reported 172 4TC and the 180 5TC for the preceding 12 months.
Monthly FFA settlement rates for 172 4TC and 180 5TC will be calculated from the daily published rates in the usual way.
The two step approach is made necessary because there is existing options open interest in the 172 4TC which expires before the end of 2016 and the 172 4TC and the 180 5TC may have differing volatility profiles.
In the event new open interest in options in the 172 4TC is opened for settlement beyond 2016 it will settle based on the then prevailing calculation (ie the differential derived from the 180 5TC).