If you would like to join the competition as a company or individual, simply complete the signup form here.

No. The competition is completely free, and participants are not required to pay anything to participate.

Yes. In fact, the entire competition is designed to serve as an introduction to the futures market and the accompanying program will introduce both the futures market and the INE container freight contract itself. Our team will organise webinars and in-person events as well as offer individualised support and guidance to participants throughout the competition.

INE Container Freight Index Futures (CoFIF) are a type of futures contract traded on the Shanghai International Energy Exchange (INE). They are a financial instrument designed to reflect the price of shipping containers from Shanghai to Europe. Market participants can buy and sell the contract freely to either benefit from advantageous price movements (speculative trading) or protect their business against adverse price changes in the real world (hedging).

The contract is financially settled, i.e., upon expiry, contract holders are compensated financially according to their position. The final settlement price is based on the Shanghai Shipping Exchange's Shanghai-Europe Export Containerized Freight Index based on Settled Rates (SCFIS) using FAK freight rates declared in bill of ladings for shipment from Shanghai to Hamburg, Rotterdam, Antwerp, Felixstowe and Le Havre.

The INE is regulated by the China Securities Regulatory Commission (CSRC) and serves as every trader's ultimate counterparty. All trading profits and losses are settled through the exchange, and the INE guarantees the enforcement of contracts and payout of profits.

1. Liquidity: The INE's CoFIF contract is highly liquid, making it easy to execute large volumes without impacting the market price, with daily turnover typically equivalent to a container volume of 80,000 x 40' dry.

2. Electronic Trading: All trading happens electronically, so users can see the market live on their own screen and execute trades immediately by themselves.

3. No Counterparty Risk: The INE is a state-owned and regulated futures exchange. It serves as the counterparty for each trade, so counterparty risk is avoided even if individual traders default on their obligations.

4. Pricing: Serving as the underlying price index, the SCFIS is based on the freight rates actually applied in the physical market as opposed to the other indices that are based on surveys or even just quotations. The Shanghai Shipping Exchange, the publisher of the SCFIS, produces some of the longest and the most widely used container freight indices, such as CCFI and SCFI.

5. Bonded Marketplace: The INE is able to tap into the ample liquidity in China without being subject to Chinese taxation. International participants can use USD and RMB to trade and profits can be moved back out of China in less than 2h.

No. Container freight rates are volatile and thus prices can change quickly as a result of market expectations. The INE CoFIF market was created as a venue to allow industry participants to hedge their price exposure and thus protect themselves against unexpected adverse price movements. In the market, both speculators and hedgers come together to price their expectations into the market. This is important, as trading can only occur when two parties have different price expectations: every buyer needs a seller, otherwise no trade can occur. Thus, while speculative trading is possible and, in fact, even desirable, industrial users can instead use the market as a pure hedging tool.

Consider the following example: A forwarder has secured 1000 40' slots at $1500 per 40' dry from liners but has not yet fixed any cargo with shippers. As negotiations with shippers can take time or no price can be agreed upon, the forwarder can sell April CoFIFs to lock in the current market price (~$2500) and then take spot cargo in April. If the spot price falls to $1500, the forwarder will earn $1000 less from their spot cargo but gain an equivalent amount in the futures market. If the spot price rises to $3500, the forwarder will lose $1000 in the futures market but earn $1000 more for their spot cargo instead. In either case, the forwarder has locked in an effective price of $2500 and is now protected against price volatility.

Alternatively, consider a second scenario: A BCO has a cargo of 1000 40' dry containers in April but no capacity and rate agreed yet with liners. As negotiations with liners can take time or no price can be agreed upon, the BCO can buy April CoFIFs to lock in the current market price (~$2500) and then book spot cargo in April. If the spot price falls to $1500, the BCO will pay $1000 less for their spot cargo but lose an equivalent amount in the futures market. If the spot price rises to $3500, the BCO will earn $1000 in the futures market but pay $1000 more for their spot cargo instead. In either case, the BCO has locked in an effective price of $2500 and is now protected against price volatility.

Useful links:

Find more information about the INE CoFIF contract here on the official INE website.

Find CoFIF market data and statistics here on the official INE website.

Find more information about the SSE SCIFS index here on the official SSE website.

Find more information on how to access the Chinese futures market here.

Find a summary of the Chinese futures market trading rules here.

Further questions?

Write us at bands-cup-2024@bandsfinancial.com or give us a call at +852 3903 6000. Our team would be more than happy to answer your questions!