Baltic Exchange

The Baltic Exchange is the London institution at the centre of the dry bulk and tanker freight markets. Its origins run to a coffee house in 1744, and it has been owned by the Singapore Exchange since 2016.

The Exchange publishes the freight rate assessments that the physical and derivative markets settle against, including the Baltic Dry Index and its constituent vessel-class indices. Assessments are produced from submissions by a panel of shipbroking firms reporting where they judge the market to be on defined routes with defined ship descriptions, and the benchmark administration function sits in a separate regulated entity, Baltic Exchange Information Services Ltd, authorised by the Financial Conduct Authority as a benchmark administrator in an announcement of 16 March 2020, which is what allows the assessments to serve as a settlement reference for forward freight agreements. Baltic Exchange Ltd is itself a wholly owned subsidiary of Singapore Exchange Ltd, and the Guide to Market Benchmarks records that the Exchange is not directly involved in the production, management or distribution of the data.

The index families it publishes, their route baskets and their weights are set out at the Baltic Dry Index and freight indices , and the derivative market that settles against them at forward freight agreements . The full article will cover the Exchange’s history and governance, the index families and route definitions, the panellist process and the controls on it, the Baltic Index Council, the Baltic Code, and how an index moves from a physical fixture report to a settlement price.