UBS launches tradable investment benchmark for freight derivatives

UBS Investment Bank has launched the UBS Blue Sea Index, a tradable benchmark for global investments in the freight derivatives market, constructed using liquid, actively traded dry-bulk Forward Freight Agreements (FFAs). “The UBS Blue Sea Index opens up this asset class to institutional investors and private banking clients looking for portfolio diversification as well as providing end-users with a simple way to hedge their exposure to freight price volatility,” Ilija Murisic, executive director, Hybrid Derivatives Trading at UBS.

“Dry freight transportation volumes to countries including China and India have grown dramatically over the last 12 months,” says Murisic. “At the same time, the number of freight derivative contracts traded has increased exponentially. FFAs remain however predominantly a hedging instrument for shipowners, charterers and other organisations involved in the transportation of commodities and are largely inaccessible for the broad investor community.

UBS has incorporated a proprietary port