LCH.Clearnet Limited (LCH.Clearnet) announced that cleared freight volumes more than doubled* in September from a year earlier as traders increased their hedged positions to mitigate their exposure to freight prices. Rising iron ore imports by China and declining availability of shipping in the Atlantic Basin, which was due to an increase in transatlantic shipments, pushed freight prices to three year highs.
Alberto Pravettoni, CEO of LCH.Clearnet’s Repo and Exchanges business, which includes the freight clearing business, said: “Global chartering companies, ship owners and trading companies are increasingly looking to manage their risk through cleared trading opportunities. The surge in cleared freight volumes in September, which was driven by strong demand from China and a shortage of available shipping routes, is evidence of our clients’ strong demand for our world-class risk management services.”
The volumes recorded in September are the second highest since LCH.Clearnet’s Freight Service was launched in 2005. The Freight Service has a 70% market share of dry freight volumes.
LCH.Clearnet’s Freight Service provides an independent clearing service for OTC Forward Freight Agreements (FFAs) for the most actively traded routes; thirteen dry and ten wet routes, as well as options on the four dry timecharter routes; Capesize, Panamax, Supramax and Handysize.
Approved Brokers have open and equal access to the service and can register their OTC brokered trades with LCH.Clearnet for clearing through a clearing member of LCH.Clearnet.
*144,536 lots were cleared in September 2013 which represents a 126% increase on the average monthly lots cleared during 2013.