FFAs: Finding patterns in the numbers
An FFA is a financial forward agreement that allows ship owners, charterers and others to hedge against the volatility of freight rates and gives the contract owner the right to buy and sell the price of freight for future dates. FFAs are a risk management tool, allowing a company to take advantage of the opportunities in the market, and for NORDEN, FFAs are instrumental in helping to create a more sustainable, agile company.
Mastering the FFA market requires data, insights and experience – a combination, which with the hiring of capabilities like Arthur Gaidon and Mustafa Koyuncu is in place.
“Finding the patterns in numbers and prices is something I truly enjoy,” Arthur Gaidon tells NORDEN News. “Patterns are always there, and finding them, and using them correctly, is vital for making the right decisions.”
Top of the charts
Since joining NORDEN, Arthur Gaidon has developed the FFA desk and is impressed by how the transition has been embraced by the company.
“By increasing FFA trading activity, NORDEN is becoming the agile company it seeks to be,” he says.
One year in and NORDEN has already had considerable success, ranking among the top 5 FFA traders within Panamax and Supramax. Inspired by the value Arthur Gaidon and the
FFA desk have created in dry cargo, NORDEN’s tanker business has now also moved into FFAs.
With former stints at Maersk Oil Trading and gas firm SEAS-NVE, Mustafa Koyuncu has rich experience of commodity trading. Like Arthur Gaidon, he noticed data-driven transformation taking place within NORDEN.
“I’ve worked with companies in transformation before and find being part of that journey to be truly exciting. Changing the way you do business, meaning decisions are not just based on a hunch, but also on data and calculated risk, is exciting to be part of,” Mustafa Koyuncu says.
Both FFA traders split their time between playing the role of the internal broker and insuring physical requirements against unwilling market moves and thereby managing risk, and on what they call ‘calculated speculation’. The latter refers to leveraging both market knowledge and opportunities.
“It’s about identifying patterns in the market and avoiding leaving opportunities on the table,” Arthur Gaidon says. “I work closely with our research and risk teams and see myself as the final executant, but in no way work alone. The collaboration between the Research Desk, Risk Management, the ‘classic’ shipping profiles, the many global offices and the FFA desk enables us to make the right decisions”.
A united effort
As the only FFA traders in their respective departments, Arthur Gaidon and Mustafa Koyuncu could be somewhat isolated in their teams, but that is not the case.
“We collaborate across tankers and dry cargo, providing a wide palette of knowledge to ensure we make calculated risk decisions, providing value for NORDEN,” says Mustafa Koyuncu.
There are now plans to further expand the teams, building on the strong momentum and solid reputation in the market.