Cleartrade Exchange Offering Bunker Fuel Swap Contracts

Cleartrade says its market offers a better way to trade bunker contracts.

Cleartrade Exchange (CLTX) says it is listing three fuel oil single swap contracts, allowing traders to swap as little as one metric tonne of fuel oil on the exchange's commodity and freight derivatives platform.

The new contracts, available today, are Singapore IFO180, IFO380, and Rotterdam barges 3.5 percent sulfur, with settlement against the Platts Fuel Oil Price Assesment.

"Adding these contracts is a response to demand from our members and the wider market to enhance our range of tradable asset classes," said Richard Baker, CEO of Cleartrade Exchange.

"The introduction of the highly liquid bunker fuel contracts to our regulated marketplace is the latest demonstration of our commitment to developing these products further."

The exchange said the new contracts provide effective price discovery and liquidity and also improve members' ability to manage risk across interlinked swaps and options.

Volatility in the crude oil market and unrest in the Middle East makes bunker costs a particular burden for the shipping industry, CLTX said, making bunker hedging an important strategy for operators.

"We can expect bunker costs to be the greatest burden for the shipping industry for the foreseeable future," Cleartrade said.

The new swap is tailored for efficient hedging as well as trading, providing a cost-effective way of managing risk.

"The advent of the Fuel Oil Single Swap on Cleartrade Exchange addresses the requirements of a large sector of the market which need to trade this commodity in parcels of hundreds rather than thousands of tonnes," said Morten Erichsen, president of NOS Clearing ASA.