The Baltic Exchange’s subsidiary, Baltic Exchange Information Services Ltd (BEISL), has been authorized by the UK’s Financial Conduct Authority (FCA) as a benchmark administrator under EU Benchmark Regulation. This means that the Baltic Exchange’s daily dry bulk, tanker and gas freight indices are regulated by an EU National Competent Authority.
“We are very pleased to have received authorization from the FCA,” commented Baltic Exchange Chief Executive Mark Jackson. “This status ensures that financial institutions, including freight derivative traders using European clearing houses, will be able to continue using Baltic Exchange data for settlement purposes. Users of our index administration services can be assured of our strong governance, robust benchmark design, transparent methodologies and clear accountability. Our high standards of design and governance uphold confidence in the global shipping freight benchmarks that we produce.”
Having come into effect on January 1, 2020 for EU administrators, EU Benchmarks Regulation requires administrators of a range of benchmarks to put in place appropriate governance arrangements, to have effective controls to ensure the integrity of input data and to maintain adequate records. BEISL engages an accounting firm to conduct an annual review of its compliance while panelists are subject to regular audits.
To achieve its authorization as a benchmark administrator with the FCA, BEISL has strengthened its governance arrangements, adding an independent BEISL Oversight Function.
There are now three bodies responsible for the oversight of the Baltic’s benchmarks: BEISL Board of Directors which has overall responsibility for the administration of the benchmarks; Baltic Index Council which brings together market expertise to ensure that the BEISL benchmarks reflect the economic reality of the shipping markets measured; and BEISL Oversight Function whose main role is to ensure regulatory adherence in all areas of benchmark related activities.