On a typical day 68 shipbroking panellists will assess 160 routes and the Baltic Exchange will calculate and publish 1,100 prices.  This information is used to settle physical and futures contracts, so ensuring the integrity of the complex process is critical. 

The Baltic Exchange’s subsidiary, Baltic Exchange Information Services Ltd (BEISL), is authorised by the UK’s Financial Conduct Authority (FCA) as a benchmark administrator under EU Benchmark Regulation. To achieve this authorisation, the Baltic Exchange has a tried and tested methodology, governance and robust day-to-day overview processes.  Each of these processes are documented in the Guide to Market Benchmarks and an important part of this jigsaw is the role of the Quality & Business Improvement Lead, Rashad Issa. 

 

Background and Expertise

I am the Quality & Business Improvement Lead and have been with the organisation for around one year now. I am a Chartered Quality Professional and fellow of the Chartered Quality Institute, a certified auditor in Quality Management Systems and hold an MSc degree in Applied Project Management, Managing Innovation & Organisational Change. I’ve now been working within this area for over a decade and have international experience in implementing operational governance, quality assurance and control processes in the financial services, retail, and health sectors.

On a day-to-day basis, I look after the Baltic’s quality management and business improvement processes; in other words, anything that has to do with policy and procedure. 

Now that we are regulated, I support the index production process and all of its quality control, quality assurance, and any areas of improvement. This is to ensure all aspects of the process are managed in a systematic approach.

 

A crucial role to play

At the Baltic Exchange, “our word our bond” is what we live by and we have long been trusted to provide credible benchmarks which underpin a multi-billion dollar industry. But now that we are regulated, it brings a whole new level of credibility to the operation and potentially allows new market participants to begin trading on contracts that settle against our data.

We have to be able to continuously demonstrate that our policies and procedures are robust and provide the necessary assurance. They should also demonstrate that if and when an incident occurs, our policies support the investigation, resolution and recovery steps necessary to maintain the integrity of the indices. Being regulated means that our operational framework can address any matters related to the methodology of producing indices, handling incidents, complaints, whistleblowing and prevention of market abuse - to name just a few.

 

Processes are key

There are many examples of quality assurance and quality control processes. For example, the ability to verify that the calculations we have in place for our indices are producing a correct outcome is one of them. This is an internal process and takes place regularly. Bringing it to the surface and ensuring that the process is structured is what Quality Assurance means.

For example, we now have an entire process around error detection for all our indices. We conduct checks in a system build separately from our data management system.  This is aimed to validate that our published prices have no errors. 

Another example is the approach we take to evaluate the performance of our processes, in particular, those relating to our panellists who are a key part of our index production. Setting out clear metrics to review how panellists contribute to the index production process is key. We look into the entire relationship and objectively audit and assess their responsibilities in line with regulation. 

Our audits assess the entire operation under the panellists’ adherence to the requirements in four categories: operational, capacity, commercial and quality of market assessment. Each category has its own Key Performance Indicators (KPIs) that are clearly set in the scope of the audit. The KPIs are reviewed daily, monthly, quarterly and annually. The audits are cyclical and are conducted every 12 months with each panellist, at which point the panellist is given the authority to continue working with the Baltic for a  further 12 months.

 

Keeping standards high 

We must ensure production, compliance, operational improvements - as well as the results from quality assurance and control - are not processes that operate in isolation. Streamlining these processes and ensuring high collaboration between all Baltic departments and panellists supports the alignment with regulatory requirements.

As we operate in a competitive industry, being regulated and authorised by the FCA brings us a very strong competitive advantage. To build on that, we work with everyone involved to make it clear to the market why this regulation is of benefit to us all. Conducting audits, internal checks, error detection, documentation control and review, external third-party auditors assessing our adherence to regulatory requirements are all areas that bring further transparency to the Baltic’s operating model.

Providing such transparency, as we operate in a tighter and more regulated environment, provides confidence in the market that we operate at higher standards than our competitors.

 

Moving things forward

Now more that ever, we want to engage more with our panellists and members. We want to understand the needs of everybody involved with us and listen to them, whether they are customers, panellists or members. 

We want to work with all these stakeholders to ensure our successes are sustainable. We also want to continue to improve on all areas of our products and services, and address our stakeholders’ needs as they evolve.

In my opinion, putting stakeholders at the heart of our policies and procedures, will be a game changer for the Baltic.  

 

A special type of organisation 

The Baltic Exchange is an organisation that's over 250 years old and has been operating based on integrity and trust from the industry and wider maritime sector. Increased regulation means that this trust is now taken to another level as it helps demonstrate effectiveness, assurance, control and governance. 

Being part of such organisation is absolutely fantastic. It is people who make or break a place, and the Baltic is made up of brilliant, inspirational and supportive people. It is indeed a special organisation to be part of.