I write to advise you that the Baltic Exchange has entered into exclusive discussions with Singapore Exchange (SGX) regarding its offer to acquire the Baltic. This follows negotiations with a number of third parties over the future of the Baltic. The Board considers that SGX has made an attractive proposal, which will enable the position of the Baltic to be significantly strengthened, whilst addressing the needs of Members, shareholders and other stakeholders. Click here to view press release.
I firmly believe that this is a very exciting offer that can facilitate a new future for the Baltic Exchange enabling its reputation and position within the global maritime community to be strengthened, whilst protecting the services offered to members, our index production methodology, multiple clearing house model, relationship with FFA brokers and the Baltic Code. Importantly, it has the potential to grow our presence in the increasingly important Asian shipping market and enlarge the FFA market across the region.
Today, I am not writing to outline the details of this offer – we will be presenting SGX’s proposal in detail and seeking your input over the coming weeks. What I wish to address is the bigger issue of whether a change in ownership can be a good thing for the Baltic.
The Baltic Exchange is a successful business that delivers real value to its members and underpins the bulk shipping markets. This success has been built on our independence and integrity. Our ability to deliver a set of neutral market benchmarks, to provide trusted standards and offer dispute resolution depends on the Baltic’s widely recognised impartiality and impeccable reputation.
This impartiality, however, does not arise from our shareholding structure or from the way in which we deliver our services. There is no reason why a single owner of the Baltic Exchange cannot continue to foster and protect the institution’s independence.
Our independence reflects our ability to bring together competing interests in a neutral forum. Indeed, the Baltic’s success in recent years has not been because of its shareholder base, but because to its wide membership and the ability to contribute to the functioning of the marketplace as a whole. The owners, brokers, charterers and traders who make up the Baltic Exchange collaborate under the Baltic brand for their mutual benefit. This collaboration does not depend on whether or not they are shareholders.
SGX does not propose ending the way in which we deliver our services, but rather has committed to maintaining those aspects that make the Baltic such a success. Simplifying our shareholding base frees the Baltic to continue to develop its potential, under one new owner committed to investing in the development of its future in a way that is simply not possible under the current model.
Members will have the opportunity to hear about the proposal over the coming weeks as we explain the plans in more detail before asking the Board to recommend it to shareholders. We will be organising a series of town-hall meetings and one-on-one presentations with Members, shareholders, panellists and other stakeholders and I look forward to meeting as many of you as possible during this period.