Shanghai Clearing House launches FFAs clearing service

16 April 2013 08:05  [Source: ICIS news]

SHANGHAI (ICIS)--The Shanghai Clearing House (SHCH) launched a clearing service on 16 April, 2013, for forward freight agreements (FFAs) traded and settled in Chinese yuan, the SHCH said on Tuesday.

The clearing service caters to the three most actively traded FFA - Capesize 4CTs (CTC), Panamex 4TCs (PTC), and Supramax 6TCs (STC) - which account for 90% of the total global dry-bulk FFA market, the SHCH said.

The Chinese-yuan settled FFA (RMB FFA) is a tool for managing forward freight risks with hedging and price discovery functions, the SHCH said.

Ships and cargoes owners can hedge the risks associated with ship leasing by locking in their freight costs through taking long or short positions in the RMB FFA market, the SHCH said.

The RMB FFAs can be traded by companies registered in China, including shipping companies, and commodity suppliers and end-users such as steel mills, power plants and cement manufacturers, it said. 

The RMB FFA clearing service has many strategic implications for Shanghai, as it serves to strengthen its competitiveness in the global freight and financial derivatives markets, and enhance its position as a global shipping and financial hub, said Fang Xing Hai, director of the Shanghai Financial Services Office.

By: Chow Bee Lin
+65 6780 4359

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