September was a record month for over-the-counter (OTC) dry bulk freight trades in 2011. LCH.Clearnet Limited’s (LCH.Clearnet) market leading freight clearing service cleared a total number of 86,000 lots. So far this year, monthly volumes have averaged at approximately 71,000 lots and open interest now stands in excess of 285,000 lots.
Freight volumes have rallied in recent weeks as a result of volatility in capesize rates and increased Chinese demand for Iron Ore shipments from Brazil. Following a year of lower price volatility and weaker prices in general, September’s results represent a welcome positive inflection in the market.
Cleared volumes now account for over 95% of total traded Dry FFA volumes, and LCH.Clearnet handles over 70% of these volumes.
LCH.Clearnet is committed to working closely with the industry to ensure that OTC freight clearing reflects the ongoing needs of the marketplace by continuing to develop and enhance its service, providing a robust, competitive and flexible offering. In July, clearing fees for dry bulk FFA trades were cut by 50%. LCH.Clearnet’s new clearing platform, ClearWay, is connected to 5 trading platforms, delivering true straight through processing as well as providing an improved registration platform for brokered trades.
Isabella Kurek-Smith, director, energy and freight, says “These record volumes demonstrate the market’s appetite for effective and robust clearing services for OTC commodities. We are committed to providing a competitive offering: a combination of cost effective pricing, the highest standards of risk management and the capacity to clear a wide range of innovative products.”