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Michael March – Director, Corporate Communications
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LCH.Clearnet Freight cleared volumes set new records as fee reductions and service extensions are announced

London, 6 June 2007

LCH.Clearnet is pleased to announce record cleared volumes in its OTC Freight Forward Agreement (FFA) clearing service in May. Cleared volumes hit 25,000 lots by the end of the month, exceeding April, itself a record month for volume, by almost 50%.

As the leading clearing house for dry FFA contracts, LCH.Clearnet expects  further volume growth as it continues to develop and enhance its service, whilst offering a competitive and cost effective service to its members and users. As part of this commitment, LCH.Clearnet has announced that, with immediate effect, it will be scrapping cash settlement fees for FFA  trades. These were previously set at 50% of clearing fees.

And as part of its development plans, LCH.Clearnet will be introducing clearing for OTC Freight Options later this year. This service extension will initially cover options in the three main Dry Timecharter routes; Capesize, Panamax and Supramax.

The launch of clearing for OTC FFA options will complement the existing suite of FFA products cleared by LCH.Clearnet, which has experienced significant growth since its launch in September 2005. So far this year, over 2500 trades, representing 66,000 lots with a notional value of over $2.6bn, have been registered for clearing. Open Interest currently stands at over 35,000 lots with a notional value of $1.6bn.

There are now seventeen Clearing Members in the LCH.Clearnet OTC Freight clearing service, themselves extending the service to more than eighty market participants. Nine FFABA brokers, who register matched FFA trades for clearing through LCH.Clearnet, are also signed up to the service.

Peter Shepherd, Managing Director – Commercial Services at LCH.Clearnet, said: “This  extension to our OTC Freight clearing service, allied to ever increasing volumes, highlights the important role played by the LCH.Clearnet clearing service in the growing Freight Derivatives Market and our readiness to broaden our range of products to meet customer needs”

John Cunningham, who leads the marketing of clearing services for freight products at BNP Paribas Commodity Futures, said  “We are very encouraged with the increasing participation and growth in volumes of the LCH.Clearnet FFA clearing service. The financial strength of BNP Paribas as a financial institution, coupled with the track record and experience of LCH.Clearnet as the largest independent global clearing house means that our freight clients can deal with absolute confidence in this highly volatile market.  We look forward to working with LCH.Clearnet to further open up this market to participants from all sectors, whilst helping to ensure market security, stability and transparency.”

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