It is usual for the FFA brokers to send an early morning curve (bids and offers for each contract period) to provide some colour to the market.

This will be updated throughout the day with new and improved bids and offers as they come in. They will also alert any “firm” numbers they hold. This means they have authority to trade that price and volume for a restricted amount of time (usually a few minutes) without first referring to the trader. For example, “Firm bid, Cape April - $5,000, 30 days”. They may also specify the clearing house if one is preferred by the bidder. If the bid level is of interest the trader would communicate “Yours” immediately, as this is a first come, first served market. If the firm price was an offer of interest, they would communicate, “Mine”.

Since this is a first come, first served and typically fast-paced market, it is normal to communicate via instant messenger for expediency. Otherwise, the telephone or squawk boxes are used. As mentioned before, the broking shop must have recorded lines on all means of communications. Emails are usually too slow, but it does depend on the individual markets. The FFA broker will work with their client to find the most effective means of communication for their needs.

More often prices are negotiated in the FFA market. For example, a client may spot a bid for Cape 5TC April at $4,750 for 30 days which is the closest to their offer of $5,000. They may tell the broker they will sell 15 days of Cape 5TC April at $4,900 for instance, and the negotiations may continue until a price and volume suitable for both counterparties is reached.

Since this is a cleared market, the counterparties are kept anonymous.

The brokers will provide market information throughout the day e.g. trades in the market as they hear happen.

It is very important to note, once the trade is concluded, it is not possible to walk away - it is a binding deal. It is also incredibly bad form to “flake” i.e. pull firm pricing when a counterparty tries to hit it (unless of course you have just traded it all and not yet had reasonable time to pull that pricing from all the brokers who were given the price).

A Trade Confirmation Note from the broking shop detailing the trade made – market, contract period, price, volume, and clearing house will be received post-trade. Their back office will also have given up the trade to the relevant clearing house.