The Baltic Exchange Advisory Council is proposing a switch to settlement against the Baltic Exchange’s 82,500 dwt Panamax Index and routes from 5 April 2021.

In 2018, after a very extensive consultation and review, the Baltic Exchange introduced a new Panamax Index with revised vessel description and routes. Up until 1 January 2020, Baltic panellists provided dual reporting for the old 74,000 dwt index and the new 82,500 dwt index. Since then, a fixed differential of USD 1336 between the old and new index has been established.

Although the back-office infrastructure is in place to trade the new index, all FFA trades are still settled against the 74,000 dwt index. This can be explained by concerns over liquidity and the potential confusion of having two sets of forward curves simultaneously circulating in the marketplace.

After informal enquiries, it has become apparent that the majority of market participants wish to transit to the new index. It has been suggested that a logical transition date would be in connection with the split of a quarter. With many countries having public holidays during the first week of April, there is likely to be slower trading activity. It is therefore suggested that Monday 5 April, a public holiday, should be a good day to transition. Many countries will then have their first trading day on 6 April, allowing a gentle transition into trading the new index.

After a transition of the trading against the new index, the Baltic will initiate a dialogue between all stakeholders, including the central counterparties (CCPs), to facilitate a transition of open interest. The aim is to have all panamax activity on the same and correct index within the second quarter.