Fish Pool concept

help-97859Fish Pool ASA is authorised to operating an international, regulated marketplace for trading of derivatives within fish and seafood. We offer financial salmon contracts – forwards and options.

Watch our presentations or read the text below to get an explanation of Fish Pools products. You are also welcome to call us at +47 55 70 67 00 if you have any questions.

Download presentations here:

Part 1: Introduction to Fish Pool in English, Norwegian (norsk) or French (Français)

Part 2: Clearing of Fish Pool contracts in English, Norwegian (norsk) or French (Français)

Presenting the Fish Pool concept

The prices for Atlantic Salmon are highly volatile and represent a continuous risk for all parties involved. The lack of predictability makes it difficult for the buyers and sellers to plan their investments and operational activities in a longer time perspective. The industry needs an instrument for risk management which can offer a better predictability for the bottom line and at the same time offer the flexibility needed in order to trade an underlying biological product.

Why are Fish Pools products important?

Financial contracts represent such a tool. A financial contract works independent of the physical delivery of fish. The basis of this concept is that a buyer and a seller – with Fish Pool as intermediate – agree on a price and a fixed volume for a future delivery. When the contract has come to the realisation period, the buyer and seller will either receive or pay the difference between the agreed contract price and the last months average spot price (measured as Fish Pool Index TM).

Fish Pool in brief:

  • Two trade members at Fish Pool agree today about a price in NOK/kg and a volume in 1 tonne lots for one or several future months. This is the contract price.
  • The contract price reflects the expected future price for fresh, gutted salmon 3-6 kg, Superior Quality, delivered FCA Oslo.
  • Fish Pool Index TM reflects the average total monthly market price for fresh, gutted salmon delivered FCA Oslo. This is called the spot price (NOK/kg). Read more about Fish Pool Index™ here.
  • If the spot price for the contracted month is higher (lower) than the contract price, the seller (buyer) pays the buyer (seller) the difference between the contract price and the spot price multiplied by the contracted volume in kg.

Fish Pool Contract Illustration.jpg

Illustrative example: 

A buyer and a seller agrees on a contract in December for a price of 32.00 NOK/kg in January for a volume of 100 tonnes at Fish Pool. The contract is to be settled as a bilateral contract the coming January.

When January arrives, the following happens:

  • The average market price (reflected by Fish Pool Index TM) for December turns out to be 34.00 NOK/kg.
  • The buyer and seller are settled against Fish Pool Index TM. In our example the difference between the contract price and the index is 34.00 NOK/kg – 32.00 NOK/kg = 2.00 NOK/kg. In our example, the buyer receives a payment of 2.00 NOK/kg x 100 t = 200’000 NOK, which is to be covered by the seller of the contract.
  • Both parties has managed to secure their price at a level of 32.00 NOK/kg at the time of settlement.
  • When entering January, both parties will be able to buy or sell their fish in the physical spot market at a level of approximately 34.00 NOK/kg.

What are the advantages of this concept?
In contrast to the traditional physical contracts, well known to the salmon industry, the financial contracts offers the following advantages:

  • Opportunities for a more stable and predictable income.
  • Long term horizon. Focus on prices up to 2 years ahead.
  • Insertion of smolt based on factual price information.
  • Ability to make back-to-back fix price agreements.
  • Opportunity to secure a price, but still have the full flexibility concerning decisions related to harvesting, processing or trading of fish.
  • Easy and flexible to enter and to exit contract positions.
  • Trading the next 2 years independently of biomass.