Who trades forward freight agreements (FFAs)?
The freight derivatives market started with the players that had natural exposure in the shipping market – owners and charterers. They saw the need for this market to develop and some of them worked hard to ensure that it succeeded. From there, institutional money came on board, i.e. hedge funds and investment banks. Some of their trading might be speculative, where they buy or sell because they might forecast the market moving in a given direction. Other times they might have some sort of quantitative trade on, where one of their mathematical models tells them that they should buy or sell a certain contract. You never really know why a hedge fund or bank puts on a certain trade.
