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58 Mark Jackson, Baltic Exchange and Loh Boon Chye, SGX

The Baltic Exchange, along with its owner, the Singapore Exchange, is in discussion with shipbrokers about ending the centuries-old practice of providing free freight assessments in exchange for membership of the longstanding British institution

The two chief executives have been busy launching various new indices to stay ahead of the game

THE Baltic Exchange, which was bought by the Singapore Exchange in 2016, is eyeing a new revenue model.

Negotiations with some 30 panelists globally have been ongoing regarding the centuries-old practice in which data was freely supplied as part of membership of the Baltic Exchange.

Chief executive Mark Jackson has acknowledged that shipbrokers are seeking a better deal.

The agreement about providing assessments in exchange for free membership and exclusive distribution rights was set to expire three years after the acquisition by SGX and was up for renewal as of mid-November. 

The age-old British shipping institution is now prepared to remunerate shipbrokers who provide it with freight assessments.

The exchange is becoming more dynamic, responding faster to market needs. 

In October, it launched a new operating costs index, a quarterly assessment for dry bulk vessels, with plans to expand to other segments. 

Three new liquefied natural gas indices were launched in 2019, while one new clean tanker route and four new dirty tanker routes were introduced on March 1. 

However, the Baltic Exchange did face a backlash from some of the forward freight agreement community regarding its decision to reflect low-sulphur fuel oil in its indices rather than — or in addition to — a scrubber-reflected assessment.

One participant in particular was concerned that FFA contracts based on high-sulphur fuel oil still trading would be left out of pocket due to the pricing gap between the two fuel types. 

"Through increased engagement with the industry, SGX is working on bringing together the physical shipping and FFA businesses, and raising awareness around the importance and value of hedging, especially in an increasingly uncertain and volatile world," SGX's chief executive Loh Boon Chye said.

"For SGX, the investment has never been about changing the Baltic Exchange; it is about working with an organisation with a high standing in the global market place and allowing it the space to continue to do what it does well," he said.

"A willingness on both parties to learn from each other has also been critical in the successes of the business," the SGX head said.

He added that "7,000 miles might separate the Baltic Exchange and SGX, but there is little distance between the two organisations".

Mr Jackson also appeared in the Top 100 in 2017 and 2018, while Mr Chye also appeared in the Top 100 in 2016. The Baltic Exchange appeared in the Top 100 in 20102011201220132014 and 2015.


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