Cleartrade Exchange, an OTC marketplace for shipping
and commodities trading, backed by London’s
Freight Investor Services, has launched operations in
The Monetary Authority of Singapore has given the bourse
in-principle regulatory approval to operate a futures market
under the Recognised Market Operator regime.
The exchange will initially offer forward freight
agreements for major shipping routes, as well as iron ore and
fertiliser swaps on its broker-neutral trading screen, with the
potential to expand its offerings to dry bulk and steel
Richard Baker, the bourse’s CEO, said he was
excited to be bringing a single trading screen to a market
dominated by phone broking. "It’ll be a five year
evolution. Volumes will be small to begin with, mainly block
trading of phone-brokered deals. The trading screen is what was
missing before," he explained. "There were too many closed
pools of liquidity. But we’ll be able to
effectively process electronic orders, with straight-through
clearing to LCH.Clearnet."
It is understood the Anglo-French clearing house has been
granted in-principle approval by MAS, and has also been
approved by the UK Financial Services Authority.
LCH.Clearnet became the first to clear container freight
swaps last summer. Singapore Exchange’s AsiaClear
service also clears FFAs.
Baker is confident of qualifying for a Swap Execution
Facility designation under the Dodd-Frank Act, admitting the
bourse to trading from the US market.
"We were deliberately designed with that in mind," Baker
said, adding that the MAS had helped it understand what would
be needed if it was to win the Commodity Futures Trading
Baker said he did not fear an immediate challenge from the
London Metal Exchange, which has made no secret of its desire
to muscle in on the $37bn freight market in recent years.
Last year, the LME submitted a proposal to the Baltic
Exchange to form a joint venture for FFA trading. The move met
resistance from OTC freight traders.
"[LME CEO Martin] Abbott is ambitious," Baker said, "but
fundamental changes would need to be made to their proposal.
The Baltic, too, would need to update their [BaltEx] trading
Freight Investor Services is already a paid-up member of
Cleartrade, which will have free access to the
Cleartrade is open to membership from interdealer brokers,
principal and investment traders and general clearing