Forward Freight Agreements (FFAs)

High volatility seen in the physical freight market has led participants to search for hedging opportunities within the FFA market as part of their day-to-day risk management strategies.                                                                

The prominent feature of an FFA contract is its flexibility, which gives it an advantage over purely physical hedging.

A clearing house is a fundamental feature of FFA trading because it provides stability to the market by effectively eliminating counterparty risk and ensuring both the buyer and seller fulfil their contractual obligations.