The Baltic Exchange is entering a new era in its 270 plus year history. New owners in the Singapore Exchange (SGX); new price discovery opportunities in established as well as new markets as a result of the acquisition; an opportunity to build on important synergies in the products offered by the Baltic and by SGX; as well as a new way of working that will see a streamlined board of directors and a clearer mandate that the Baltic is definitely here for the industry and for its members.
Mark Jackson takes over the role of Baltic CEO from Jeremy Penn, a man who is credited with steering the exchange along a safe and trusted route for the past 12 years or so. And his immediate reflection after just one day in the job: “My key responsibility is to guide what is a strong investment into the City of London by Singapore and into the maritime sector.” He is clear that while it is still very much ‘business as usual’ at the Baltic, the time has probably come to start looking positively at how the exchange and the job it does, can be enhanced and the ensuing rewards maximised globally.
“If you ask me where the Baltic was going prior to the transaction I would say it was heading in the direction of a very comfy place, but there was erosion. There are changes in the way communication happens and in the way financial companies utilise their data, but the Baltic needs to recognise there is a lot more it can do to benefit the shipping community with the data it has.
“In some respects, the Baltic had shifted very much towards the futures market when people started talking about indices, but it needs to get back to the physical market and look at how the data and the indices interact with those markets. And that comes down to the core relationship it has with its panellists and its broking community,” he told SMI.
As Mark Jackson stressed, the biggest change that has happened to the Baltic, post transaction, is that the most important people now are its members. “Members and the panellists now have a louder voice at the table. Before they tended to get drowned out either by the shareholders or the directors, who had a fiduciary duty to look after the shareholders. This quite often brought them into conflict but now it is very clear; the Baltic is here for the industry and particularly the members.”
Reluctant to be drawn on what new products or indices may be in the offing following the acquisition, the Baltic CEO was clear that while the index would continue to be published only once a day, the Baltic was looking at ways it could publish more indices during Asian time zones.
“We have always been open to looking at new indices but they will have to have some level of longevity to them if we are going to invest the resources. With our new shareholders, and a smaller and nimbler board, we should be in a position to bring new indices to the market a lot quicker than was done historically. But what those are at the moment I am not sure, but more to the fact that we will certainly be looking at this,” he said.
The acquisition of the Baltic by SGX raised some concerns at the time about the future prominent role that London would continue to play in global shipping. Certainly Singapore has been very strong in flexing its maritime muscles globally but Mark Jackson is adamant about the future strength of London as a prime maritime financial service cluster moving forward.
When questioned on the likelihood of an Asian-centric shipping industry, Mark Jackson replied: “London maintains its premier position because of time zones and when you are a true global trader, and not just a local trader, you need to be aware of the global market or you will get caught out. This is the advantage that London has.
“Local markets will throw up new opportunities because there is an arbitrage that will need to be played between the local trader and the trader who is also looking at the global position. While you have those inefficiencies you will always get trade and the Baltic wants to be positioned to be aware of both of those markets,” he said.
While there will be synergies between SGX London and the Baltic, Mark Jackson was keen to stress that they are different businesses. “There is an element within SGX that is to do with the derivatives market and here SGX is a customer of the Baltic; so there is an alignment in wanting to develop markets to do with freight derivatives, where the two companies have a mutual interest.”
But it was the fact that the deal to buy the Baltic was not about taking the Baltic away from London but was Singapore investing in London, because of what it had to offer.
Mark Jackson again: “I still think that from a maritime cluster perspective, London is very difficult to beat – a lot of people want to come to live and work here.
“The major thing that has happened since the Brexit vote is that Government and politicians now talk more about business. And from London’s point of view, as a place to do business, that makes things very attractive from a shipping perspective. I believe there is a lot of opportunity at the moment and for London and shipping it is a very exciting time.”
So is the new CEO excited about the Brexit vote? “I am, but not necessarily because I am happy with Brexit. But I have sat on enough boards to know that when a vote has gone one way, you accept that vote and say right let’s get the best done with what we have. This is very much what the Baltic will be trying to do in making the best post Brexit, and seeing what advantages can be played.”
Can we get more owners moving to London?
“The UK Tonnage Tax has potential. It has been stable enough now for a few years. When you start looking at Europe and UK tonnage tax, I think the UK tonnage tax is undervalued.”
So what qualities does the new CEO believe he will bring to the job? “I am a shipping guy – an apprentice who went through all the ranks and ended up with a Greek ship owner, so hopefully I am going to be a steady hand to keep the Baltic orientated towards the shipping market. I am also a past chairman of the Baltic so I have experience of the old Baltic.
“I have the ability to speak both languages – I can speak a traditional shipping language and I can speak financial freight and I think I am a good bridge,” he said.