Some brokers taking wrong approach to freight, says senior broker

Inter-dealer brokers could be taking the wrong approach by entering the freight derivatives market through joint ventures with physical shipping brokers rather than directly broking physical freight, says a senior energy broker.

GFI, Icap and Spectron have all entered into joint ventures with shipping brokers to broker derivatives – or forward freight agreements (FFAs) – based on physical freight. The shipping brokers bring the physical experience, while the financial brokers bring the derivatives experience.

The trouble with this approach is that eventually the energy brokers may well at some point need to get into the physical freight directly, because that is where the sustainable volumes will be, the broker

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