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| 3.5% Fuel Oil Rdam v. 3.5% FOB MED Spread Swap |
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Rotterdam 3.5% fuel oil futures are a cleared financial instrument that allows market participants to hedge their price risk for barge lots of high-sulfur heavy fuel oil used in the bunker and utility markets. This futures contract is the spread between 3.5% Rdam fuel oil and the 3.5% FOB MED, a cleared financial instrument for cargo lots of a low-sulfur grade of motor gasoline originating in the European Mediterranean.
The price settlement for each contract month is equal to the arithmetic average of the mid-point of the high and low quotations from Platts European Marketscan for 3.5% fuel oil under the heading "Cargoes FOB Med Basis Italy" minus 3.5% fuel oil under the heading “Barges FOB Rotterdam” for each business day that both are determined during the contract month.
All positions are aggregated and margined according to the value at risk as calculated by the SPAN® system. Cross margining of offsetting positions across markets can result in reduced margin obligations.
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