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Index Methodology

Sling Index Methodology

The Sling is based on assessments from a group of physical LNG players for the 3rd, 4th, 5th and 6th half Calendar Months following the day of assessment. The period for the first half-calendar month (H1) begins on the 1st day of each calendar month, while the polling period for the second half-calendar month (H2) begins after the 16th day of each calendar month.

The index is based on the simple average of assessments for the first full month of (H1 and H2) available. In the example below, in the first half of April, the published index will be the May index. In the second half of April, the published index will be the June index.

The group of assessments are cleaned for outliers, with the upper and lower 15% of the assessments rounded to the nearest whole removed.

The minimum number of assessments (including outliers) needed per half month is 5, below which the relevant period will fall back to the previous value, this means that the minimum number of assessments which will be used to in a relevant period will be 3 (less 1 outlier from the top and bottom).

The is highlighted in the figure below.

 

Index participants are required to quote the Sling according to the specifications determined by EMC which is the index administrator. They are also to observe the hierarchy of evidence set out in the IOSCO Principles of Financial Benchmarks as follows:

  • Actual and directly relevant arms-length transactions concluded by the participant in the underlying interest or related markets;
  • Quotes given by the participant to other market participants;
  • Quotes received from dealers (e.g. deal-able bids and offers);
  • Actual but indirectly relevant arms-length transactions in the underlying interest or related markets; or
  • Other market information (e.g. indicative prices) or expert judgment. Expert judgment for this purpose may include impact assessment of market conditions or impairment of the credit quality of one or more market participants, or assigning more weighting to bids/offers which are more current in time than actual traded data.

Where possible, the assessment is based on observable transactions. Alternatively, other data such as bids, offers and expert judgment will form the assessment.

Key highlights about the Sling methodology:

  • Simple and transparent – Sling methodology is a simple average of participant assessments after excluding outliers. The outliers are the upper and lower 15% of the assessments.
  • Consistent and controlled group of participants – EMC informs the market about the number of participants who have committed to contribute assessments. These participants represent a consistent and controlled group of contributors from a balanced portfolio of producers, consumers and traders.
  • No editorial intervention – Sling is based on a simple average formula, and does not include any editorial intervention.