Our word, our bond. Those timeless and honourable principles are supposedly carved into the heart of every self-respecting shipbroker.
More specifically, those words are intended to encapsulate the values of everyone associated with the Baltic Exchange — particularly its members, be they shipbrokers, principals, traders or even journalists.
Integrity, honesty and fairness in business are the explicit pillars of the Baltic’s ethical stance, having been born from the historic business culture of the City of London. And surely they must be, since they are printed on the bottom of all Baltic stationery.
Yet, ensuring the market does more than merely pay lip service to such warm words has always been a challenge.
All the more so now, its members having sold out their mutual ownership 18 months ago for about $113m to the Singapore Exchange (SGX).
No longer can the Baltic simply appeal to its mutual members to "do the right thing" and ostracise anyone who goes rogue. It is welcome to see on the Baltic website details of the SGX "whistle-blowing" scheme and the email address whistleblowing@sgx.com.
As a subsidiary of a global financial services institution, the Baltic now has to rely on more rigorous discipline. As a part of that, the Baltic has announced plans to modernise its code of conduct, to make it applicable not only to members but also the wider market.
First drawn up in 1983 and last revised in 2014, the current Baltic Code lists nine basic principles of ethical business practice that members are required to uphold.
It also contains what could be termed the shipbroker’s 11 Commandments, a list of “unacceptable” practices that carry the threat of censure, suspension or even expulsion of an individual or their company.
Yet instances of such censure remain few and far between, and certainly held back from widespread public view, despite instances over the past decade of members indulging in practices that have seen them branded “dishonest” by High Court judges, no less.
A review of the code led by law firm Norton Rose Fulbright has resulted in the drafting of a New Baltic Code with a greater focus on fairness and competition, anti-bribery and corruption, and benchmarking.
Baltic chief executive Mark Jackson said the initiative aimed to raise standards across the market and increase the attractiveness of doing business with Baltic members.
While he talked about the heightened political and regulatory scrutiny of commodities markets, transparency at the Baltic remains limited with the exchange declining to share the draft code until it has been reviewed by its council ahead of publication later in the year.
As a result, one can only guess at whether the new code has real teeth. Signs are not encouraging, however.
In announcing the review, the Baltic said members will be expected to “promote compliance” among all market participants, and that they were “expected to refrain” from transacting with counterparties who deliberately refuse to adhere to the principles and good practice standards set out in the revised code.
As everyone is aware from the Libor fixing scandal a decade ago, reliance on best practice counts for little when financial incentives are heavily stacked against it.
With shipping transactions often being worth life-changing sums, we should not be naive about the pressures and incentives individuals may face to bend, or even break, cosy principles.
Our word, our bond. They are certainly fine words and honourable principles. Easy to say and pay lip service to, but far harder to live up to.
The Baltic deserves credit for grappling with an issue to which there are no easy solutions, in a market that remains often opaque, illiquid and multi-jurisdictional.
Maintaining and even improving the integrity of shipping transactions is a worthwhile ethical aim and good business practice, not only for SGX but for Baltic members and the market more broadly.
Yet no one should delude themselves that shipping markets have always been — and will remain — somewhere where the sharks and snakes move among more honourable players.
