Understanding FFAs: Index Development
In this series, Baltic Exchange showcases key details and information behind Forward Freight Agreements (FFAs) to help potential entrants better understand the entire FFA process and support the business development aid for FFA brokers.
The Baltic's FFA resource can be found on our website by clicking here or by clicking “FFAs” on the top taskbar. Please direct any comments or queries to Nadia Mirza, Head of Business Development at the Baltic.
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Baltic Exchange Information Services Limited (BEISL) publishes indices and forward assessments for the physical and FFA and options markets. As an approved benchmark administrator, its indices are regulated by the UK’s Financial Conduct Authority (FCA) to ensure their robustness and reliability. All Baltic routes and price assessments reported are as representative as possible of the world’s principal cargo trades and reflect trade flows in the physical markets.
Baltic Exchange consults extensively with market users and brokers to create new indices. Once a potential route is identified, the Baltic draws up a list of potential panellists and assesses their ability to provide rates. The Baltic then begins Trial reporting, which includes Blind Trial, Private Trial, Public Trial, with each phase lasting between one and three months.
Baltic uses these trial phases to adjust and refine the criteria of theindex along with feedback from the panellists and market usersOnce the index is live, it cannot be changed without a fully documented market consultation. If changes are needed, then fresh trial periods, and potentially dual-reporting, is undertaken.
Each index or assessment the Baltic publishes is produced by the Baltic Exchange’s own Freight Assessors with information provided by its official panellists.
These panellists are experienced and competitive shipbrokers who do not invest in the markets they report on, and are free from conflicts of interest. In terms of forward assessments, panellists provide daily end-of-day submissions for the drybulk, tanker, LNG, LPG and container markets.
Click here to access the full list of the Baltic’s FFA panellists under Forward Assessments.
The Baltic’s index and forward assessment process relies on a structured, transparent methodology.
Panellists provide their submissions during a 15-minute confidential window 30 minutes pre-publication. Baltic assessors perform quality checks, ensuring submissions meet accuracy standards and are supported by evidence. Any changes are logged for audit trails.,
Senior Baltic assessors cross-check all data before authorising publication. The final assessments are distributed via the Baltic website, API, and its partners. Clearing houses receive end-of-day reports to calculate daily variation margins and settlements for their Baltic futures products.
The Baltic’s panellists are subject to monthly, quarterly and annual reviews of their submissions, while the Baltic’s official Operational Benching quality control mechanism enables freight assessors to review the panellist’s suitability to report on a route.
BEISL itself also undergoes quarterly and annual reviews as part of its role as a Benchmark Administrator, while the Baltic Quality Assurance team conducts daily and quarterly reviews of the benchmark calculations.
Baltic Exchange’s Advisory Councils enable the Baltic to engage with its membership to discuss the development of its indices and receive feedback and requests for changes and new products. Each council represents a cross-section of the Baltic’s indices.
There is a specific Advisory Council dedicated to FFAs and forward assessments known as the Baltic Forward Assessment Advisory Council.
Click here to find out the list of current council members.