NOS launches new clearing convention for FFAs

The new convention is made of a series of new initiatives by NOS and improvements to be rolled out during the summer of 2007. The first major improvement is a change in the way fees for Dry FFAs are charged for clearing of OTC contracts, making clearing substantially cheaper.

The change in fees reflect a growing need for clearing costs to be detached from fluctuations in market prices. Until now, clearing fees have been charged as a percentage of contract prices. The new convention changes the basis of all fees for OTC conversions of Dry contracts to a standard US$/lot (where a Lot is either ONE day of time charter or 1000 tons of cargo, depending on the contract traded).

The new clearing fee will be a US$ per lot fee per route and will be the same for all contracts within one route. There is no delivery fee when clearing through NOS.

“This fee reduction will be substantial for principals, and should create further liquidity growth for cleared FFA contracts,” says Morten Erichsen, CEO of NOS Clearing in Oslo. He adds: “Clearing is the preferred way forward for our clients, and we believe this first step in the new clearing convention will make NOS ultra competitive for both direct principals and general clearing members alike.”

For the last seven years, NOS has been a pioneer of clearing systems and services for the FFA markets both in dry bulk and in tankers. Combining solid experience from financial clearing with a team of experts from the freight markets have made NOS the market leader in FFA clearing with 94 500 lots of open interest in May 2007. This is estimated at close to 85% market share worldwide.

“We pioneered Dry Bulk FFA clearing and have developed our vision of how this market should develop in close cooperation with our nearly 170 members – I feel that it is perfectly natural for us to once more take the lead in developing the Dry Bulk FFA market for our customers,” concludes Erichsen.

The improvement in fees will be followed by changes and improvements in contract settlement structures, clearing reporting, change in market price used for Mark-to-market settlements for the dry contracts and the availability of clearing for global customers.

From the 21st May 2007 the new fee structure will be:

If you have any questions please do not hesitate to contact NOS.
Hanne Bævre Johansson

Vice President
+47 23 25 93 20