MCX to offer freight futures

Multi Commodity Exchange (MCX) has entered into a strategic collaboration with the Baltic Exchange of London to launch freight futures in the country.

This will enable the Indian shipping industry to hedge freight rate risk. MCX officials said this would help businesses overcome constraints of convertibility and direct participation outside India.

In a scenario where the energy cost was increasing and the rising volume of global trade pushing up the cost of freight, hedging facility would help global commodity traders in India minimise the impact of rise in transportation costs.

Freight costs were adding up to 10 per cent of total trade cost and the futures would help check the adverse impact of volatility in freight rates.

Jignesh Shah, MCX managing director, said MCX had worked out strategic alliances and JVs with the world's leading exchanges and commodity centres like TOCOM, Japan, and DMCC of Dubai.

The collaboration with Baltic Exchange would launch freight futures in India.

The chairman of the Baltic Exchange, Peter Kerr-Dineen said, "Freight markets worldwide are presently at historic highs and we have seen unprecedented volatility in the last 12 months. Both of these factors tend to be good for derivatives trading and we wish MCX the best possible fortune in the venture."