The Baltic Exchange, owned by Singapore Exchange, plans to launch new indexes for grains, gas and potentially air freight in its biggest shake-up for more than a decade, according to executives and two sources familiar with the matter.
The London-run company operates the world’s leading shipping freight index, which tracks rates for vessels transporting dry bulk commodities including iron ore and coal. It is looking to diversify its business after a near decade-long shipping downturn hit trading volumes and profitability.
“We are only going to make real money through volume, so we have got to increase our reach,” said Baltic Exchange Chief Executive Mark Jackson. “Everything we are doing now is about increasing our reach.”
For its listed owner, the far larger Singapore Exchange (SGX), the new products are part of a drive to expand its own global presence and increase its market share, particularly in Asia.
The centuries-old Baltic told Reuters it was developing two new grain freight indexes as well as a liquefied petroleum gas (LPG) index.
The grain indexes, which the company aims to launch this year, will be tradable instruments, allowing investors to take a position on freight rates at a point in the future, known as forward freight agreements or FFAs.
The new products will target users including gas and grains players, moving the company beyond its traditional shipping base, which it hopes will help counter future market shocks.
Some of the biggest grains traders such as U.S. groups Cargill [CARG.UL], Archer Daniels Midland, Bunge and China’s COFCO International have been consulted on the development of the new grains indexes, according to the two sources, who declined to be named, citing market sensitivity....MORE