Contrary to exchange traded securities, over the counter ("OTC") trading remains decentralised, opaque and generally not very well digitalised.
Many asset classes and industries over the years have started embracing technology in order to make their respective markets more efficient and to avoid a complete regulation of their activities.
Financial markets underwent such a transition, starting with the introduction of MiFID in 2004 and the trend accelerated after the credit crisis of 2008. Thanks to technology and centralised tools, many assets continued to trade OTC such as bonds and CDS, options, and commodity derivatives. These markets became more efficient and transparent whilst avoiding the complexities involved with exchange trading and the additional regulatory constraints.
One of the key change to this market was when market participants started to contribute to various platforms in order to create a daily composite/average level for prices and volumes.
Some market participants feared the impact that increased transparency would have on trading margins, while others saw the opportunity to increase trading volumes by welcoming more market participants and reducing counter-party risk.
In the dry freight market today, both for "cash" fixtures and in the paper market, we can see a similar pattern. A multi-billion dollar market with a potential to grow significantly. In order to reach its full potential, this market is going to have to follow a similar transition when it comes to transparency and efficiency. One key step to this transition is for market participants to see the importance of contributing data to third party providers in order to publish independent levels.
Joining the Shipfix community is a first step in this direction. Shipfix anonymises and aggregates billions of data points from the shipping industry to provide, back to its community, daily market indications that can be applied to Freight, FFA and commodities trading. Once cleaned, this data can also be used by risk and compliance teams within shipping and trading firms.
Reach out to our team and let's discuss how this can benefit your company.
More information about Shipfix in the Shipfix Support Center