Following a detailed review of the current arrangements led by law firm Norton Rose Fulbright with oversight by the Baltic Exchange Council and the Baltic Membership Council, the New Baltic Code has been drafted to bring together a set of principles and business practices which will be applicable not only to Baltic Exchange members, but also to the wider market.
Baltic Exchange Chief Executive Mark Jackson explained:
Times have changed and Baltic Exchange members are operating in an environment with a greater focus than ever before on compliance. Shipping cannot expect to escape the heightened political and regulatory scrutiny that has been placed on the commodity markets since the 2007-2009 global financial crisis. By introducing this new code of conduct, we want to preserve confidence in and the integrity of the physical freight and freight derivatives markets; eliminate poor practices and raise standards across the entire market as well as increase the attractiveness of doing business with Baltic Exchange members.
The New Baltic Code is based on the following principles:
Principle 1 - Integrity of Markets
Market Participants shall act to uphold the integrity of the physical freight and freight derivative markets and avoid any action or omission that may adversely affect these markets or bring the Baltic Exchange and its membership into disrepute.
Principle 2 - Fairness and Competition
Market Participants shall treat their customers fairly, compete fairly and avoid anti-competitive agreements and practices.
Principle 3 - Ethical Business Practice
Market Participants shall do business in an ethical manner, eschew corrupt practices and comply at all times with applicable laws on money laundering, sanctions and tax evasion.
Principle 4 - Good Market Conduct
Market Participants shall comply with applicable laws in respect of their activities in the freight and freight derivative markets, maintain authorisations and permissions to undertake regulated activities and devote due skill, oversight and resources to these activities.
Principle 5 - Accurate and Credible Benchmarks
Baltic Exchange comprises more than 640 members globally and is responsible for a large proportion of dry cargo and tanker fixtures as well as sale and purchase of merchant vessels.
The New Baltic Code will be binding on members of the Baltic Exchange and members will be expected to promote compliance amongst all market participants. Members of the Baltic Exchange will be expected to refrain from doing business with counterparties who deliberately refuse to adhere to the principles and good practice standards set out in the New Baltic Code.