The motto of the Exchange – ‘Our Word Our Bond’ – symbolises the importance of ethics in trading. Members need to rely on each other and, in turn, on their principals for many contracts verbally expressed and only subsequently confirmed in writing. Ethical trading is regarded by The Baltic Exchange as essential. Over the years the following basic tenets have been developed:
1. All market participants are expected to honour their contractual obligations in a timely manner.
2. In the conduct of his profession a broker shall exercise great care to avoid misrepresentation and shall be guided by the principles of honesty and fair dealing.
3. No broker has authority to offer a vessel or a cargo unless duly authorised by a principal or by brokers acting on the instructions of principals. Under no circumstances may a broker avail himself of, or make use of an authority if he does not actually hold it. Neither can he alter the terms of an authority without the approval of the principal concerned. The practice of misrepresenting authorities or making up a “bid” or “offer” is clearly against the Code and will not be tolerated. This is sometimes known colloquially as “spoofing”.
4. An owner’s broker should offer his vessel ‘firm’ only for one cargo at a time. A charterer’s agent should similarly offer his cargo ‘firm’ to only one vessel at a time.
5. A broker can receive more than one firm offer for a vessel or cargo but must make it quite clear to others who wish to make him an offer that he has already received one or more firm offers for the particular vessel or order concerned.
6. An unsolicited offer or proposal does not necessarily establish the channel of negotiation. A broker should respect the channel or channels through which a vessel or cargo has been quoted to him but the principal may direct which of those channels to use should he enter into firm negotiations.
7. Before a broker quotes business from a source whose bona fides is unknown, it is expected that he makes reasonable investigations and communicates the result of those investigations to anyone considering entering into negotiations. If such checks have not been made or completed this fact should be conveyed clearly to the other principal or his broker.
The Directors have highlighted, from time to time, certain practices, which they consider unacceptable from brokers accredited to the Baltic Exchange.
1. Organisations operating as Freight Contractors/Freight Speculators offering named tonnage against tenders without the authority of owners/disponent owners.
2. Agents/brokers implying that they hold a ship/cargo firm or exclusively when they do not, in order to secure a response from another party.
3. Off-setting against hire or freight payment(s), amounts representing unspecified or vague claims.
4. Withholding payment of commissions in respect of hire/freight/deadfreight/ demurrage earned and paid.
5. Using information obtained from Exchange members for business transacted directly with or between non-Baltic members. This practice involves the use of marketsensitive information given by another member, but being used outside the Baltic market.
6. Passing market-sensitive information gained through the Exchange to non-Baltic brokers or agents so that they can deal directly with Baltic members’ principals or their brokers. This has the effect of diluting the value of the market and runs the risk of an agreement being concluded with someone who may not be fully familiar with the practices of the market and may not observe the same standards of business
7. Owners offering their vessel firm for business when they hold a firm offer from another charterer. The unwanted offer should be declined before the owner makes another offer
8. Charterers fixing two vessels for one cargo and then holding both vessels over a period of time on “subjects”.
9. The distribution of route or index rates, produced by the Exchange from its panel reporting companies, for the purpose of pricing charters or contracts without an appropriate commission to a Baltic broker.
If a member of the Exchange fails to comply with any of the above terms or practices he may be disciplined by the Directors under the Rules. The Directors have power to censure, suspend or expel a member from the Exchange in these circumstances.
The Exchange has arrangements for investigating disputes between members, and between members and non-members, which arise from the breach of these basic principles or the employment of unacceptable practices and market ethics generally. These are set out below. Members are encouraged to bring such instances to the attention of the Exchange in writing so that they can be investigated.