SUBSCRIBER NOTE: Platts opens consultation on Cash BFOE assessments

S&P Global Platts is opening a formal consultation on its Cash Brent (BFOE) assessments on how best to reflect the changing dynamics of Dated Brent, the settlement process and the publication of partial and cargo indications.

In its Cash BFOE assessment, Platts considers bids, offers and trades where the buyer is willing to accept the nomination of Brent, Forties, Oseberg, Ekofisk or Troll crude loading in the North Sea by the seller upon physical performance of the trade.

As of October 1, 2019, Platts has been including CIF Rotterdam indications for these five grades in the Dated Brent mechanism.

DELIVERED CARGOES IN CASH BFOE: Platts would like to invite feedback on how best to reflect delivered cargoes in the Cash BFOE assessment. Currently, Platts is only seeking feedback on how to reflect the delivery of cargoes of either Brent, Forties, Oseberg, Ekofisk or Troll.

Specifically, Platts is looking for market input on how a delivered cargo could be nominated for delivery as performance against a Cash BFOE cargo -- whether traded as a full cargo or upon convergence of partials -- and what role the cost of freight would play when measuring the difference between the nomination of a delivered cargo and an FOB-loading cargo.

In the physical Dated Brent assessment, Platts uses the Freight Adjustment Factor (FAF) to align CIF Rotterdam indications with FOB indications. Platts is seeking feedback on whether or not there is a role for the FAF in the settlement mechanism.

SETTLEMENT: Additionally, Platts invites feedback on the settlement of Cash BFOE partial assessments in light of market standards around expiration and "fallback day."

Currently, Platts assessments reflect Cash BFOE partial contracts where any unconverged contracts are financially settled using the Month 1 assessment on the final working day of the calendar month.

However, Platts understands that a range of settlement and convergence practices are employed in the market, including the use of fallback day, or one day prior to the final trading day of each month. Platts invites feedback on amending its assessments to reflect fallback day practices.

PARTIAL CONTRACTS ON FALLBACK DAY: Platts is also inviting feedback on whether its assessments should reflect Month 1 partial contract trades and full cargo trades during the settlement period at the end of each month.

TIMING: In addition, Platts invites feedback on the timing of any potential changes resulting from the above consultation.

Please send all comments to europe_crude@spglobal.com and pricegroup@spglobal.com by January 31, 2020.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing.