Forward Freight

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Forward Freight Agreements

LCH's Freight service provides an independent clearing service for the registration of  Forward Freight Agreements (FFAs) for 13 most actively traded dry freight routes, as well as options on the four dry timecharter routes: Capesize, Panamax, Supramax and Handysize.

Globally based chartering companies, ship owners and trading companies are increasingly looking to manage their risk through cleared trading opportunities. By clearing through LCH, clients benefit from the stability and the implicit security of our default fund.

Approved Brokers have open and equal access to the service and can register their trades with LCH for clearing through a clearing member of LCH. Trades can be blocked into LCH through 2 regulated trading venues – Baltex, an MTF regulated by the FCA, or Cleartrade Exchange, a  Market Operator (RMO) regulated by the Monetary Authority of Singapore (MAS).

Products - click on each for more information
Dry Timecharter Basket Routes

Description Cash settled freight forward contracts on the following Dry Timecharter Basket Routes:

CTC (Capesize TC Avg 4 routes)
CPT (New Capesize TC Avg 5 routes)
PTC (Panamax TC Avg 4 routes)
STC (Supramax TC Avg 6 routes)
HTC (Handysize TC Avg 6 routes)
 

  • Lot size 1 day
  • Currency US Dollars
  • Pricing US $ per day
  • Minimum tick US $ 0.0001 to account for final settlement
  • Fixed price The traded price or the previous day's settlement price as supplied end of day by the Baltic Exchange
  • Floating price In respect of daily settlement, the floating price will be the end of day price as supplied by the Baltic Exchange In respect of final settlement, the floating price will be the mean of the daily Baltic Exchange spot price assessments for every trading day in the expiry month
  • Last trading day At 18:00 hours UK time on last business day of each month within the contract series Exception – December contracts will expire on the 24th December, or previous business day, where the 24th December is a non working day
  • Contract series - November and December 2017 only.
  • Final payment The first business day following the expiry day
  • Business days UK business days
Dry Voyage Routes

Description Cash settled freight forward contracts on any of the following Dry Voyage Routes:

C3E (Tubarao – Qingdao)
C4E (Richards Bay – Rotterdam)
C5E (W Australia – Qingdao)
C7E (Bolivar – Rotterdam) 

 

  • Lot size 1,000 mt
  • Currency US Dollars
  • Pricing US $/mt, $0.01
  • Minimum tick US $ 0.0001 to account for final settlement
  • Fixed price The traded price or the previous day's settlement price as supplied end of day by the Baltic Exchange
  • Floating price In respect of daily settlement, the floating price will be the end of day price as supplied by the Baltic Exchange In respect of final settlement, the floating price will be the mean of the daily Baltic Exchange spot price assessments for every trading day in the expiry month
  • Last trading day At 18:00 hours UK time on last business day of each month within the contract series Exception – December contracts will expire on the 24th December, or previous business day, where the 24th December is a non working day
  • Contract series - November and December 2017 only.
  • Final payment The first business day following the expiry day
  • Business days UK business days
Dry Trip Timecharter Routes

Description Cash settled freight forward contracts on the following Dry trip Timecharter Routes:

P1A, P1E (Transatlantic RV)
P2A, P2E (Cont Trip Far East)
P3A, P3E (Trans Pacific RV)

 

  • Lot size 1 day
  • Currency US Dollars
  • Minimum tick US $ 0.0001 to account for final settlement
  • Fixed price The traded price or the previous day's settlement price as supplied by the Baltic Exchange
  • Floating price In respect of daily settlement, the floating price will be the end of day price as supplied by the Baltic Exchange In respect of final settlement for P1A, P2A & P3A, the floating price will be the mean of the last 7 Baltic Exchange spot price assessments in the expiry month In respect of final settlement for P1E, P2E & P3E, the floating price will be the mean of the daily Baltic Exchange spot price assessments for every trading day in the expiry month
  • Last trading day At 18:00 hours UK time on last business day of each month within the contract series Exception – December contracts will expire on the 24th December, or previous business day, where the 24th December is a non working day
  • Contract series - November and December 2017 only.
  • Final payment On the first business day following the expiry day
  • Business days UK business days
Cash Settled Premium Paid Option on Dry Timecharter Routes

Description Cash settled Premium Paid Option on any of the following Dry Timecharter Basket Routes:

CTO (Capesize TC Avg 4 routes)
CPO (Capesize TC Avg 5 routes)
PTO (Panamax TC Avg 4 routes)
STO (Supramax TC Avg 6 routes)
HTO (Handysize TC Avg 6 routes) These contracts, if "in the money" expire into their underlying freight forward contracts with a traded price equal to the Strike Price (see below)

 
 

  • Lot size 1 day
  • Currency US Dollars
  • Pricing US $ per day
  • Minimum tick US $1 per day
  • Option Type Options are European style and will be automatically exercised on the expiry day if they are "in the money". If an option is "out of the money" it will expire automatically. It is not permitted to exercise the option on any other day or in any other circumstances. No manual exercise is permitted.
  • Option Premium The Premium is paid at the time of purchase
  • Last trading day At 18:00 hours UK time on last business day of each month within the contract series Exception – December contracts will expire on the 24th December, or previous business day, where the 24th December is a non working day
  • Expiry 18:00 hours UK time on the last trading day Automatic exercise settings are pre-set to exercise contracts which are one minimum price fluctuation or greater "in-the-money" when compared to the relevant reference price Members are not permitted to override automatic exercise settings or manually enter exercise instructions for this contract The reference price will be a price in US dollars, cents and hundredths of a cent ($0.0001), per day equal to the final settlement price for the underlying freight forward contracts For these purposes "final settlement price" means the final settlement price on the expiry day of the underlying freight forward contracts
  • Contract series - November and December 2017 only.
  • Strike Price Any whole $ value
  • Business Days UK business days
Cash Settled Premium Paid

Description Cash settled Premium Paid Option on:

P2O (Cont Trip Far East) These contracts, if "in the money" expire into their underlying freight forward contracts with a traded price equal to the Strike Price (see below)

 

  • Lot size 1 day
  • Currency US Dollars
  • Pricing US $ per day
  • Minimum tick US $1 per day
  • Option Type Options are European style and will be automatically exercised on the expiry day if they are "in the money". If an option is "out of the money" it will expire automatically. It is not permitted to exercise the option on any other day or in any other circumstances. No manual exercise is permitted.
  • Option Premium The Premium is paid at the time of purchase
  • Last trading day At 18:00 hours UK time on last business day of each month within the contract series Exception – December contracts will expire on the 24th December, or previous business day, where the 24th December is a non working day
  • Expiry 18:00 hours UK time on the last trading day Automatic exercise settings are pre-set to exercise contracts which are one minimum price fluctuation or greater "in-the-money" when compared to the relevant reference price Members are not permitted to override automatic exercise settings or manually enter exercise instructions for this contract The reference price will be a price in US dollars, cents and hundredths of a cent ($0.0001), per day equal to the final settlement price for the underlying freight forward contracts For these purposes "final settlement price" means the final settlement price on the expiry day of the underlying freight forward contracts
  • Contract series - November and December 2017 only.
  • Strike Price Any whole $ value
  • Business Days UK business days
How it works

Clearing operates through ECS, a stand alone browser-based system. The front-end to ECS is called ClearWay. All block trades eligible for clearing are either entered into ClearWay for registration with Baltex , or are registered via Cleartrade Exchange before flowing into ClearWay for clearing.  Approved Brokers can register the trades with one of the venues  between 07:00 hrs and 18:00 hrs London time. ClearWay is open until 18:30hrs for confirmation of trades by Clearing Members.

Following receipt and confirmation of eligible transactions into the ECS system, trades are governed under the rules of LCH Rulebook.

FFA contracts held by LCH are Block Futures and are subject to initial and variation margining. On expiry all open positions are cash settled.

Initial margin rate levels are reviewed periodically by LCH to reflect inherent market volatility.  Daily and final settlement of Freight contracts is based on prices provided by the Baltic Exchange.  All existing LCH Clearing Members are eligible to clear  Freight products subject to approval.

Current Margin Rates

To view the current margin rates, please click the link below.

Fees

Freight Forward Agreements (FFAs):

CPT, CTC, PTC, STC $8 per lot
CPO, CTO, PTO, STO $8 per lot
HTC, HTO $6 per lot
C3E $9 per lot
C4E $6 per lot
C5E $5 per lot
C7E $6 per lot
P1A, P2A, P3A, P1E, P2E, P3E, P2O $9 per lot

A reduction of 50% is applicable to all FFA futures and options fees until further notice

No cash settlement fees are charged for any LCH EnClear contracts.
No option exercise fees are charged.
 

In addition, the following discounts will be applied to client accounts:

Incremental monthly client volumes Discounts on headline rates
From 0-1499 lots na 
From 1500-2499 lots 15%
From 2500-4999 lots 30%
From 5000-7499 lots 40%
From 7500-9999 lots 50%
From 10000-14999 lots 75%
From 15000-19999 lots 85%
From 20000-24999 lots 90%
Over 25000 lots 95% 
Contact

Isabella Kurek-Smith

Director, Head of Commodities and Freight

+ 44 (0)20 7426 7460

isabella.kurek-smith@lch.com

Department: Commodities and Freight

Responsibilities: Client relationship management for EnClear

Location: London