ICE to Launch LNG Freight Futures Based on Spark Commodities’ Assessments in Key Milestone for Global Natural Gas Markets
February 10 2021 - 8:00AM
Business Wire
New contracts will sit alongside ICE’s fast
growing TTF and JKM LNG (Platts) benchmarks
TTF Futures OI +29% y/y; JKM LNG (Platts)
Futures and Options OI +37% y/y
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator
of global exchanges and clearing houses and provider of mortgage
technology, data and listings services, announced today that it
plans to launch LNG freight futures contracts based on Spark
Commodities’ (“Spark”) price assessments, marking a milestone in
the evolution of the LNG market.
These new contracts - called the Spark30S Atlantic and Spark25S
Pacific LNG Freight Future contracts - are traded and settled in
USD per day. The numbers in the contract names indicate the number
of days it takes an LNG vessel to complete a return voyage on the
respective routes. The settlement price of the contracts are based
on the Spark30S (Atlantic) and Spark25S (Pacific) LNG freight spot
price assessments. Market participants can use the contracts to
manage price risk in respect of round-trip voyages between the US
Gulf Coast and North West Europe (Spark30 assessment); and
Australia and Japan, Korea, Taiwan and China (Spark25 assessment).
ICE plans to launch these cash settled futures contracts on March
22, 2021, subject to regulatory approval.
These new freight contracts will form part of ICE’s global
natural gas complex as the market manages freight price risk
alongside existing TTF, NBP, Henry Hub, JKM LNG (Platts) and WIM
LNG (Platts) contracts.
“We have been in close engagement with the LNG market for more
than two years about the right assessment on which to base LNG
freight futures. During that time, LNG freight markets have become
increasingly volatile, significantly increasing demand for suitable
LNG freight risk management tools,” said Gordon Bennett, Managing
Director of Utility Markets at ICE. “We believe that our freight
futures contracts, priced against Spark’s assessment, will provide
the hedging tools the market has been waiting for. They will trade
and clear alongside the highly liquid and global gas benchmarks on
ICE including TTF, Henry Hub, NBP, JKM and WIM. This is a milestone
moment in the evolution and maturity of the LNG market and one we
think can benefit all those involved in LNG markets.”
“After a summer of LNG freight rates at record lows, this winter
followed with the highest LNG freight rates ever assessed, peaking
at $322,500/day on January 8, 2021. This volatility necessitates
new risk management tools as well as future orientated, tech-driven
price discovery platforms”, said Tim Mendelssohn, Managing Director
at Spark. “By partnering with ICE, something we are very proud to
do, we are hitting a critical milestone for our business; providing
our customers with a cleared, tradeable LNG freight product within
a platform that gives them far greater insight than their
alternatives. Importantly, it demonstrates that the market wants
progress.”
About Spark Commodities
Spark Commodities is focused on providing technology based
solutions that promote liquidity in the LNG market. Spark wants to
redefine how LNG freight prices are understood. With a strong
technical background, support from major industry players and
commercial experience trading in the LNG market, we aim to provide
a meaningful and robust index that allows the market to manage
freight risk whilst benefiting from the increased levels of
transparency that our platform provides. Empowering Trade,
Together.
About Intercontinental Exchange
Intercontinental Exchange (NYSE: ICE) is a Fortune 500
company and provider of marketplace infrastructure, data services
and technology solutions to a broad range of customers including
financial institutions, corporations and government entities. We
operate regulated marketplaces, including the New York
Stock Exchange, for the listing, trading and clearing of
a broad array of derivatives contracts and financial securities
across major asset classes. Our comprehensive data services
offering supports the trading, investment, risk management and
connectivity needs of customers around the world and across asset
classes. As a leading technology provider for the U.S. residential
mortgage industry, ICE Mortgage Technology provides the
technology and infrastructure to transform and digitize U.S.
residential mortgages, from application and loan origination
through to final settlement.
Trademarks of ICE and/or its affiliates include Intercontinental
Exchange, ICE, ICE block design, NYSE and New York Stock Exchange.
Information regarding additional trademarks and intellectual
property rights of Intercontinental Exchange, Inc. and/or its
affiliates is located here. Key Information Documents for
certain products covered by the EU Packaged Retail and
Insurance-based Investment Products Regulation can be accessed on
the relevant exchange website under the heading “Key Information
Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995 -- Statements in this press release regarding
ICE's business that are not historical facts are "forward-looking
statements" that involve risks and uncertainties. For a discussion
of additional risks and uncertainties, which could cause actual
results to differ from those contained in the forward-looking
statements, see ICE's Securities and Exchange Commission (SEC)
filings, including, but not limited to, the risk factors in ICE's
Annual Report on Form 10-K for the year ended December 31, 2020, as
filed with the SEC on February 4, 2021.
ICE- CORP Source: Intercontinental Exchange
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version on businesswire.com: https://www.businesswire.com/news/home/20210210005502/en/
ICE Media Contact: Rebecca Mitchell
Rebecca.Mitchell@theice.com +44 7951 057 351
ICE Investor Contact: Warren Gardiner
Warren.Gardiner@theice.com 770-835-0114
Spark Media Contact: press@sparkcommodities.com
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