LONDON (Reuters) — The Baltic Exchange is pressing ahead with launching a central screen as soon as it can to trade dry bulk freight derivatives despite broker worries over current proposals and a potential challenge from a separate platform.

In May the Baltic Exchange said it had applied for multilateral trading facility (MTF) status with the UK's Financial Services Authority (FSA) for BaltEx which it expected would go live by the end of 2010, aiming to boost market activity.

But freight derivatives brokers, fearing a loss of commission business in this niche market, have objected to an FSA regulatory requirement which would take away the compulsory nomination of brokers in every trade. The FSA declined to comment. "We are still working to get things ready as soon as we can," Baltic Exchange chief executive Jeremy Penn told Reuters.

Freight forward agreements (FFAs), which allow a buyer to take a position on where freight rates will stand at a point in the future, are not traded on an exchange. "It comes down to how the screen will work in terms of how a trade is launched and who gets paid for it and whether there is any potential for alternative jurisdictions if it can't work satisfactorily in the UK," a freight derivatives broker said.

Dorian Benson, chairman of the FFABA, an association which represents the views of freight derivatives brokers, said its relationship with the Baltic Exchange and the FMIUG freight users' body remained "very amicable" with all sides working to find a suitable product for traders and brokers. "In its current format the non compulsory broker nomination issue is something that members of the FFABA feel uncomfortable with and in its current format do not feel in a position to offer its full support," said Benson, who is also global head of dry FFAs at GFI brokers.

The Baltic Exchange has faced setbacks in the past over developing a central trading screen from FFA brokers.

Penn said it sought to build a "consensus of support." When asked if it would look at other jurisdictions, he said it would consider "every option."

"The reason why the Baltic was asked to and felt moved to move ahead with this project was because of the industry desire for a neutral and independent shipping centric organisation to create a market place for FFAs," he said.

"If those are the criteria that the industry wishes to see met, then I think it is pretty clear that the Baltic is still the best available solution."