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How do freight derivatives like Forward Freight Agreements (FFAs) work?
The product descriptions for FFA swaps and options can be found here:  http://www.lchclearnet.com/freight/ffas/products.asp The index (e.g. the BFA) is based on the settlement prices of the P2, P2A, and C4 contracts and the panamax TC routes.  As such it's just a performance index and replicates the returns you'd get from holding a portfolio of the constituents. I think from the clearing descriptions everything should be clear.  The wording in the link on the Baltic Exchange website is a bit nebulous.  I think they mean standardised instead of specified.  Because that's what sets the FFABA apart from OTC agreements or OTC spot markets. Edit: For more information on financial instruments in general see the Handbook of Financial Instuments.  I haven't got the latest edition but I doubt he will mention FFAs, CFSAs, or anything that's specific to maritime markets but after all they're just plain forward agreements over a not-so-common underlying.