Detailed Review by Platts Shows Rixo Trading Did Not Skew Platts Price Assessment Process

Jun 26, 2013, 13:14 ET from Platts

NEW YORK, June 26, 2013 /PRNewswire/ -- A detailed review by Platts, a global commodities information provider, shows that information provided by Swiss-based Rixo Trading International did not distort European fuel oil price assessments published by Platts, definitively refuting a recent article in The Wall Street Journal.

"Platts' sole objective is to publish price assessments that reflect true market value.  We take any allegations of price manipulation very seriously and will investigate any specific allegations," said Larry Neal, president, Platts.  "When The Wall Street Journal published its source's name, we had sufficient information to undertake an in-depth analysis that proved that no data submitted by Rixo during the lengthy period reviewed ever compromised the integrity of Platts' published prices."

On June 19, The Wall Street Journal published an article quoting Halis Bektas, a trader at Rixo, as saying that, when he was scheduled to buy large quantities of fuel oil, he could drive prices down by offering "to sell small quantities...and report those offer prices to Platts."  Mr. Bektas' claims provided the foundation for the article's allegation that evidence of price manipulation "shouldn't be hard to find."  However, these claims were immediately suspect to Platts' editors because the rules guiding its price assessment processes require that any offer or bid out of line with prevailing market value be eliminated in the price assessment process. 

The review bore this out.  Platts' review covered Rixo's participation in its price assessment processes from the beginning of 2006 through to mid-2011, when Rixo last participated in the Platts price assessment process. In the course of its review, Platts determined that on Jan. 19, 2010, Rixo made a complex offer for RMG 380 marine fuel oil delivered into Malta that was published on Platts' Global Alert real-time service and therefore widely visible and open to market scrutiny.  But Rixo's' offer price was never factored into Platts' price that day.

"Although another market participant accepted Rixo's below-market offer, the safeguards inherent in Platts' assessment processes proved effective," said Dave Ernsberger, global editorial director, oil. "We saw that the offer was below market value and immediately reviewed the situation with Rixo and its counterparty. They cancelled the transaction by mutual agreement and we published a headline to that effect on our real-time news service."   As a result, the Rixo offer was not included among the data that was considered for Platts' CIF Med high sulfur fuel oil price assessment that day. 

"We regret that the Journal did not give us the opportunity to review these specific allegations before publishing them," Mr. Ernsberger said.

Platts' review of Rixo's participation in its Market-On-Close price assessment process covered more than a hundred bids and offers over a multi-year period. (See further detail and analysis at Besides looking at the high-sulfur oil Mediterranean market (Med HSFO) where Rixo was most active, the review examined price movements in three related markets – the Rotterdam high sulfur barge market, Northwest Europe high sulfur fuel oil cargo market, and Mediterranean low-sulfur fuel oil cargo market.

This, Mr. Ernsberger said, enabled Platts to conduct a comparative study of the relationship of the HSFO Med fuel oil market where Rixo supplied data to other markets where Rixo did not supply any significant data.  By comparing the spreads between markets where Rixo did provide information against related markets where it did not, any anomalous movements in the assessments for which Rixo provided data would be apparent. 

"Our review found that market spreads followed normal and stable patterns of evolution before, during and after the periods when Rixo provided data to the HSFO Med fuel oil assessment process," said Mr. Ernsberger.  "Other than the one below-market offer which we eliminated, our review found that bids and offers from Rixo that were considered in the final Platts assessment clearly followed our normal, published guidelines, including the requirement for bids and offers to start at levels in line with the market and to improve incrementally during the assessment process."

Over the 2006-2011 period analyzed by Platts, Rixo submitted a total of 124 bids and 19 offers into the Market-On-Close assessment process, resulting in a total of 20 trades. With the exception of the offer that led to the cancelled trade on Jan. 19, 2010, all indications were deemed acceptable and were assessable by Platts. Some of Rixo's indications were used in the formation of assessments as they were competitively priced and proved a value in the market on certain dates for a certain specification of oil. On other occasions, Rixo's indications did not actively contribute to the assessment as they were not competitive enough to prove a different value. The analysis shows that no bid or offer from Rixo skewed the Platts assessment for Mediterranean high sulfur fuel oil.

There are several market participants in the Mediterranean fuel oil markets, from local bunker suppliers to international majors, and their bids, offers and trades concluded in the Platts Market-On-Close are also considered in the same way Rixo's were when active.

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