Baltic Exchange Secures EU Benchmark Status

Baltic Exchange (BE) subsidiary Baltic Exchange Information Services has been authorised by the UK's Financial Conduct Authority (FCA) as a benchmark administrator under EU Benchmark Regulation, the UK company said March 16. This means that the Baltic Exchange's daily dry bulk, tanker and gas freight indices are regulated by an EU national competent authority.

Broking and chartering are not regulated businesses, so it is down to the BE to verify the prices it receives and to explain any apparent discrepancies to the FCA. It produces an index, relying on a panel of independent companies. “We as the BE try to provide the thought leadership, and create tools for financial risk management, as the emerging LNG spot market grows,” CEO Mark Jackson told NGW last year.

Since it came into effect January 1 for EU administrators, EU Benchmarks Regulation requires administrators of a range of benchmarks to put in place appropriate governance arrangements, to have effective controls to ensure the integrity of input data and to maintain adequate records. BEISL engages an accounting firm to conduct an annual review of its compliance while panellists are subject to regular audits.

"We are very pleased to have received authorisation from the FCA," said CEO Mark Jackson. "This status ensures that financial institutions, including freight derivative traders using European clearing houses, will be able to continue using Baltic Exchange data for settlement purposes. Users of our index administration services can be assured of our strong governance, robust benchmark design, transparent methodologies and clear accountability. Our high standards of design and governance uphold confidence in the global shipping freight benchmarks that we produce."