GFI launches trading for dry freight derivatives

New York based-brokerage GFI Group is to offer hybrid voice and online trading of dry freight derivatives in a joint venture with Arrow Chartering, a London-based shipbroker.

The hybrid-trading model will offer ship owners, charterers, energy companies, trading houses and financial institutions the ability to trade a standardised forward freight contract, allowing them to hedge and optimise portfolio freight exposure. Freight-forwards are used to buy or sell the cost of chartering capacity or time on a freight boat.

The underlying physical market involves over 60,000 ships, with the derivatives market in dry freight, commonly defined as grains and iron ore, valued at $2.5 billion per annum.

“This is an underdeveloped market in terms of potential,” Michel Everaert, global head of product marketing at GFI in London, told RiskNews. Freight derivatives are currently a relatively small market trading at roughly one and a half times the underlying market, compared with a typical derivatives market which trades at approximately eight to 10 times the underlying market.

GFI’s other energy markets include coal, electricity, natural gas, and a wet freight service launched three months ago. According to Evereart, the new market complements GFI’s coal derivatives trading activities, since the cost of freight is a factor in the cost of coal. It will be available from August 7.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Chartis Energy50 2023

The latest iteration of Chartis' Energy50 2023 ranking and report considers the key issues in today’s energy space, and assesses the vendors operating within it

2021 brings big changes to the carbon market landscape

ZE PowerGroup Inc. explores how newly launched emissions trading systems, recently established task forces, upcoming initiatives and the new US President, Joe Biden, and his administration can further the drive towards tackling the climate crisis

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here