Thursday, February 1, 2018

Shipping (hedging; speculating; gambling): "Baltic Dry Index to Become Tradable After Benchmark Changes"

This will be interesting, we'll post on BDI volatility sometime before the changes kick in.

From Reuters:
* Investors want to capitalise on shipping recovery
* Changes being made to the Baltic dry bulk indices, or BDI
* Some concerned new weighting omits segment of shipping

Changes to the Baltic Exchange’s main sea freight index has created the possibility of it becoming a tradable instrument for the first time, industry officials said on Thursday.
With about 90 percent of traded goods by volume transported by sea, non-specialist investors want a way capitalise on a recovery in shipping as it emerges from a near-decade long downturn due in part to a glut of vessels ordered.

Baltic Index Council Chair Stefan Albertijn said commodities and financial markets had shown interest in trading the Baltic dry index or BDI, which gauges the cost of shipping dry bulk commodities including iron ore, cement, grain and coal.

He said the changes to the BDI, which would be effective from March 1, made that possible.
“We’re excited by the prospect of exchange traded funds based on the BDI and are confident that the BDI will remain an accurate general measure of the health of the dry bulk shipping markets,” Albertijn said in the statement....MUCH MORE