LONDON, March 25, 2011 /PRNewswire/ -- IntercontinentalExchange , a leading operator of global regulated futures exchanges, clearing houses and over-the-counter (OTC) markets, today announced the introduction of clearing (https://www.theice.com/publicdocs/clear_europe/circulars/C11032.pdf) for 13 freight swaps and a new iron ore swap through ICE Clear Europe.
The new contracts are an extension of the energy portfolio cleared by ICE Clear Europe, and will provide additional capital efficiency and hedging benefits for participants in ICE's OTC and energy futures markets. The new contracts will be offered on a cleared-only basis and will be available beginning 18 April 2011, subject to regulatory approval.
The new contracts are:
Dry Freight -- Capesize Timecharter (Baltic) Freight Swap (TCC) -- Panamax Timecharter (Baltic) Freight Swap (TCP) -- Supramax Timecharter (Baltic) Freight Swap (TCS) -- Handysize Timecharter (Baltic) Freight Swap (TCH) Wet Freight -- TC2 FFA - Northwest Europe to USAC (Baltic) Swap (WNU) -- TC4 FFA - Singapore to Japan (Platts) Swap (WSJ) -- TC5 FFA - Mideast Gulf to Japan (Platts) Swap (WMJ) -- TC6 FFA - Skikda to Lavera (Cross Med) (Baltic) Swap (WSL) -- TD3 FFA - Mideast Gulf to Japan (Baltic) Swap (WGJ) -- TD5 FFA - West Africa to USAC (Baltic) Swap (WAU) -- TD7 FFA - UK North Sea to Continent (Baltic) Swap (WNC) -- TD11 FFA - Cross Mediterranean (Baltic) Swap (WCM) -- TD9 FFA - Caribbean to USGC (Baltic) Swap (WCU) Iron Ore -- Iron Ore Swap 62% Fe (Platts IODEX) Swap (IOR)
The dry and wet freight swaps are the first freight contracts cleared by ICE and will be based on relevant rates provided by The Baltic Exchange and Platts. Like crude and refined oil, coal and other energy products, freight is a large commodity market with volatility in spot and long-term prices. Because of the strong correlations between freight and energy, ICE expects to offer margin offsets between freight and energy contracts.
Clearing for the Iron Ore Swap 62% Fe (Platts IODEX) Swap will now be available on ICE Clear Europe alongside the existing ICE energy portfolio, including coal. Clearing of iron ore on ICE Clear U.S., which was introduced in 2009, will cease as open interest migrates or expires.
ICE Clear Europe supports the risk management needs of member firms and customers in ICE's global energy futures and OTC markets, as well as the efficient development of new products. In 2002, ICE pioneered the concept of cleared OTC energy contracts, which provide participants with access to centralized clearing and settlement arrangements while reducing bilateral credit risk.
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