FFA market shifts further towards clearing
Fears of counterparty credit risk have led to a sharp migration towards clearing in the freight derivatives market over the past four months. The ratio of cleared forward freight agreement (FFA) trades to non-cleared over-the-counter trades in the last quarter of 2008 was 4.3 to 1.
The Baltic Dry Index (BDI) - which measures the cost of shipping 'dry' commodities (such as iron ore, coal, grain) across the globe - plunged 94% from 11,793 on May 20 to 663 on December 5 last year as global trade slowed sharply. Average weekly volumes of dry bulk FFAs - the standard derivative contract for dry commodities - fell by 38% in the final quarter of 2008 compared with the first three
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