SUBSCRIBER NOTE: Platts reduces incrementability in Cash BFOE spread MOC

S&P Global Platts has reduced the incrementability with which companies can change bids and offers within the Cash BFOE cargo and partial spread Market on Close assessment process to 1 cent/barrel per second effective September 3, 2018.

This decision was announced July 9 and is available here: https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/070918-pl atts-to-reduce-incrementability-in-cash-bfoe-spread-moc This change was first proposed May 22 in a note available here: https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/052218-pl atts-proposes-reduction-in-incrementability-changes-in-cash-bfoe-spread-moc-o il

Previously, a company bidding or offering a Cash BFOE cargo and partial spread in the Platts MOC could move an indication by up to 3 cents/barrel every second.

Under the new change, incrementability is reduced, meaning that a company can only move an indication by 1 cent/b every second.

This change only applies to Cash BFOE spread indications and not to Cash BFOE outright price indications where incrementability remains at 3 cents/b. Additionally, the repeat time for Cash BFOE cargo and partial spreads and Cash BFOE outright bids and offers remains at 10 seconds.

Following the introduction of implied indications functionality in the Platts MOC in September 2017, Platts has observed an increase in the efficiency of transaction execution.

Platts believes that, as a result of this trend, the previous incrementability allowed to change a Cash BFOE spread bid or offer did not sufficiently test market value at all levels and could lead to an increase in "gapping" wherein an indication moves too quickly to adequately test value.

Please send any further comments and feedback to europe_crude@spglobal.com and pricegroup@spglobal.com.

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