WHAT IS 'Baltic Exchange'

The Baltic Exchange is the only exchange in the world providing real-time maritime shipping information for traders to trade and settle shipping contracts and derivative shipping contracts.

BREAKING DOWN 'Baltic Exchange'

The Baltic Exchange is an exchange that provides maritime shipping information and facilitates trades and settles shipping contracts and derivative shipping contracts. It was begun in London in 1744 and has operated continuously since. In 2016 it was acquired by the Singapore Exchange (SGX) and has been operated by SGX since the acquisition. It is headquartered in London, with offices in Singapore, Shanghai and Athens. It currently has 600 members. 
 
The Baltic Exchange website lists the following services offered:
 
  • "Independent, high quality dry, wet and gas freight market information
  • Self-regulated chartering, sale and purchase and freight derivatives markets
  • Central forum for competing freight market interests
  • Framework ensuring high standards of business practice and co-operation 
  • London-based business facilities for members "
Although it is an exchange, it does not facilitate trades the way securities exchanges do. Instead, it facilitates meetings of members who arrange their own transactions and provides information for members to use for shipping and trading. The exchange provides lists of shipping costs, published as the Baltic Dry Index (BDI), for members to use in making trade agreements by calculating the demand for shipping relative to the capacity for shipping. The Baltic Exchange tracks these costs through a number of different indexes. It uses these costs to settle freight futures contracts called forward freight agreements (FFA).
 
This information is crucial for anyone arranging shipping, because without knowing what the going rates are for different types of cargo, a shipper could charge too little or someone who needs to use a shipper could pay too much. Traders and researchers need this information to be able to invest and trade in the shipping industry wisely.

Using the Baltic Exchange

Members of the Baltic Exchange pay an annual membership fee. These fees are tiered and include anything from simple access to the Baltic Exchange website and index information to full use of the Baltic Exchange dispute resolution services, events and settling of FFAs.
 
Access to the website gives members access to over 20 different indexes of shipping costs, information on fixtures, or finished agreements for shipping contracts, training programs and the Baltic Briefing, a regular industry newsletter. Full membership also allows them to use the Baltic Exchange services to find shipping partners and to negotiate disputes. The Baltic Exchange also hosts social membership events.
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