Norwegian freight derivatives clearing house NOS says it is expanding its clearing facilities for freight market investors by opening for clearing via General Clearing Members (GCMs). The GCMs will also have a full trading membership with the International Maritime Exchange ASA (IMAREX). A GCM is a financial institution which takes a position in between a principal and the clearing house thereby offering access to clearing for non-clearing members of an exchange. A GCM is entitled to clear its own transactions and those of its customers.
NOS and IMAREX last week announced that MAN Financial and Macquarie Bank have joined as General Clearers. “We believe that clearing will become fundamental to the continued growth of the Forward Freight Agreements [FFA] derivatives market as not only will simplify credit concerns for existing market participants it will become the focal entry point for new sources of capital,” says Mark Fitzpatrick, Head of Derivatives Clearing at Macquarie Bank in London. "The freight market shows enormous potential for us as clearing brokers. IMAREX and NOS is a leading market place, so it is natural for us to be a clearing member there”, says Ben Few-Brown, Director with MAN Financial in London. Until recently the only way to clear freight derivatives at NOS was to be a direct clearing member. This simple model of direct principal-to-principal transactions cleared under a common rulebook by a single clearing house, has worked very well in building up liquidity in the FFA markets. An NOS statement says: “The majority of contracts cleared at NOS are matched by IMAREX, but third party FFA brokers are also making an important contribution.” "Two major GCMs have recently joined us, and are now offering their clearing services to both existing and prospective clients," says NOS CEO Morten Erichsen. "We will be adding several more in the months to come."