Mercuria Asks UK Court to Void Baltic Exchange Tanker Rates

Mercuria is asking the UK High Court to invalidate Baltic Exchange tanker-rate assessments published since early March, challenging a benchmark used to price and hedge derivatives worth billions of dollars.

The dispute centers on TD3C, the exchange’s flagship tanker-route index. Mercuria argues that traffic through the Strait of Hormuz fell sharply after the U.S.-Israeli war with Iran began and Iran claimed it had imposed a blockade. The trader says the exchange should have stopped publishing the rate.

The Baltic Exchange says short stretches with little or no activity on a route are not unusual. It also says ships continued to pass through the strait and that experienced brokers provide the rate assessments.

Mercuria initially cited hundreds of millions of dollars in losses, then removed financial-loss claims from its filing. It now seeks a declaration that rate assessments published since early March were invalid.

The exchange’s lawyers warn that a ruling for Mercuria could have broad effects on the market and could force hundreds of trades to be unwound. The High Court is scheduled to begin hearing the case Monday, Oct. 26.