SSY Futures has slashed the prices for using its forward freight agreement (FFA) dealing screen, in an effort to tighten bid/offer spreads and increase screen-traded volumes. It now costs nothing to put a price on the screen and initiate a trade. Users taking screen prices will be charged commission of just 0.10%. In the freight market, the standard commission for an OTC, voice-brokered trade is about 0.25%.
"It is time for the FFA markets to move decisively to the next phase of their development," says Mark Richardson, head of SSY Futures. "For this to happen, we need to make some bold decisions, for the benefit of the market as a whole."
Bid/offer spreads tightened considerably in the first few days of the new pricing structure, and SSY Futures reported increased volumes across its screens. The new pricing structure applies for both wet and dry LCH-cleared and OTC FFA trades.
SSY Futures also says that change in pricing is a strategic move intended to "galvanise support behind LCH.Clearnet and screen trading as a concept."
LCH.Clearnet entered the freight derivatives market last September, and is looking to break the dominance of the market's leading clearer, the Norwegian Futures & Options Clearinghouse.
Isabella Kurek-Smith of LCH.Clearnet said, "LCH.Clearnet are delighted that SSY are supporting our freight clearing service both with their screen and this new competitive price structure."
SSY Futures operates the screens in partnership with GlobalCoal. Around 80 users log on to the SSY/GlobalCoal screen, which is also viewable through Bloomberg and Reuters, every day.