Last Updated: August 2019
- Develop methodologies that reflect physical market practice and in line with market requirements.
- Produce reliable, fair, data-driven and representative price assessments.
- Provide mechanisms to prevent and limit market manipulation.
- Provide greater levels of transparency for illiquid markets by providing an increased amount of anonymised, relevant data.
- Avoid selective reporting where possible whilst recognising industry dynamics and lack of liquidity.
3 step process to Spark contract creation:
- Market Engagement and Contract Design: extensive conversations/meetings with market participants and brokers to assess demand and preferred contract specifications.
- Contract Testing:
- Release of contract for testing with brokers: feedback received and contract refined where needed.
- Release of contract for market acceptance testing in form of trial period.
- Contract Implementation: launch of contract after completion of contract testing phase with all contract specifics made available to all users via the platform.
Who can submit data?
- All data submitted to Spark is divided into 2 separate categories:
- Spark Price Assessment Data (broker only)
- Market Data
- Only brokers form part of the Spark Price Assessment to ensure neutrality.
- Market Data is data received from market participants who are active in the LNG freight market. This ensures that only relevant data is provided adding further transparency to the market. New users must go through the onboarding process and will not eligible to submit data unless verified by Spark.
- The verification process shall determine the role of the user within the LNG Freight market and rights to contribute to any assessments.
What are the requirements for Brokers to contribute and how does Spark ensure they reflect the market?
- All new Brokers must be nominated by at least 2 market participants in order to contribute to the Spark Price assessment.
- Brokers must be actively involved in the spot market and must demonstrate this.
- A survey will be carried out with all Spark users every 12 months allowing the market to challenge the involvement of any brokers or suggesting the addition of new brokers.
Price Assessments and Data:
How do we assess Spark prices and how can I submit?
- Anonymised price assessments against a standardised methodology received from a wide range of relevant market participants and brokers during the assessment windows. Please see separate LNG Freight Methodology document for window details.
- Prices can only be submitted when the assessment windows are open.
- Only Broker assessments form part of the Spark Price assessment. Market player submissions help to better understand the range of views and allow for benchmarking and validation of Broker assessments.
- Unless for specific reasons, price assessments can only be submitted via the platform to allow for a more robust auditing system where required.
Verification of Submitted data:
- Static range in place to limit unrepresentative assessments. Limits can only passed if submitters acknowledge that is outside of the expected norms. These “exceptions” will be clearly recorded.
- Randomised checks on data entry.
- Each submitter’s data will be fully auditable for compliance purposes if required by law.
- Verification of submitter profile and role within market prior to having submission access.
Order of importance for collated data informing the Spark Price Assessment:
Broker assessments will be primarily be based on the following types of data (in descending order of importance). However price assessments will take into account the lack of standardisation and current lack of liquidity in the LNG freight market.
- Concluded Transactions
- Bids and Offers
- Other Market Information
- Provide full range of data submissions (min/max/average)
- Remove human bias and subjective decision making where possible
- Provide comparative data for similar contracts if applicable
- Provide clarity on number of submitters for price assessments (currently under development)
Corrections to assessments:
Spark will on occasion publish corrections to price assessments after the publication date. These errors may arise from clerical mistakes or miscalculation errors amongst other things. Spark will not allow retrospective submissions after the price assessment window has closed.
Ethics and compliance:
- Secure and fully auditable data trials.
- Protected anonymity.
- Data-driven price publication.
- All Spark employees must confirm (annually) that they have no personal or financial conflicts of interest that may limit or be perceived to limit their ability to perform their role in an objective, fair and effective manner.
Review of methodology:
- Regular, annual review process for all Spark methodologies to ensure
compatibility with market requirements consisting of:
- Data reviews
- Market player discussions
- Annual survey of Spark users
- Any market player or submitter can highlight concerns to firstname.lastname@example.org.
- Any findings shall be clearly documented with the rationale for change clearly stated.
Changes to methodology:
- All changes must be clearly explained along with the corresponding rationale.
- Clear consultation period for the market to assess and review suggested changes. Multiple opportunities will be given to the market players to comment and feedback on any proposed changes.
- Publication of changes and comments surrounding such changes.
- Any consultation period will have a clearly defined duration and will depend on the nature of the change.
- The proposed implementation period, if applicable, will be clearly communicated and within reasonable timeframes.
- Although we try to be as transparent and clear as possible, any Spark users can raise any concerns or complaints by sending an email to email@example.com. Spark commits to responding within 5 business days and will investigate accordingly. Investigation findings will be shared within 30 business days. If the User is dissatisfied with Spark’s handling of the complaint, then they may contact an independent third party.
- The information relating to the concern or complaint shall be kept on fill for future review where required.
Data Security and Confidentiality:
- All our data is hosted with Google Cloud Platform who are compliant with industry best practice. Spark follows their recommendations regarding data security.
- All relevant information relating to the price assessment will be retained for a minimum of five (5) years. This shall include any exclusions of data.
- Spark intends to have an annual independent external audit to ensure compliance with IOSCO principles and our stated methodology.
- Spark agrees to share data with the relevant authorities and regulators where required by law.
Alignment with IOSCO Principles:
Our methodology, governance process and data policies are aligned to IOSCO principles. Please find the link to the relevant IOSCO principles here.