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Index Methodology

Sling Index Methodology

The Sling indices are based on Assessments from a group of physical LNG players (Participants) for the 3rd, 4th, 5th and 6th Assessment Periods following the day of assessment.  Participants will submit Assessments to the administrator of the Sling indices on every Monday and Thursday (business day) of a week.  

For any given calendar month, the first Assessment Period of the calendar month (H1) shall begin on the 1st day of the calendar month to and including the 15th day of the calendar month, and the second Assessment Period of the calendar month (H2) shall begin on the 16th day of each calendar month to and including the last day of the calendar month.  

A Sling index in respect of a calendar month is calculated based on the simple average of Assessments for the first full month of the Assessment Periods of the calendar month. In the example below, in the first Assessment Period of H1 April, the published index values will be for the month of May. In the first Assessment Period of H2 April, the published index values will be for the month of June.

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

In determining the index value of a calendar month, there shall be at least 5 Assessments (including outliers) provided in each of the Assessment Period of the calendar month.

Where less than 5 Assessments are provided for an Assessment Period of a calendar month on the day of assessment, and:

 

(a)       the index value to be determined on the day of Assessment and the index value published after the last Assessment date are in respect of the same calendar month, the index value of the calendar month to be published after the day of Assessment shall be the index value published after the last Assessment date;   

 

(b)      the index value published after the last Assessment date is in respect of the preceding calendar month, the index value of the calendar month shall be determined based on the simple average of the Assessments submitted in respect of the calendar month on the last Assessment date; or

 

(c)       less than 5 Assessments were provided for either or both Assessment Periods of the calendar month on the last Assessment date, the index value of the calendar month to be published after the day of Assessment shall be the index value that was published after the last Assessment date (notwithstanding that the index value is in respect of the month preceding the calendar month).

 

The index determination process is set out in the figure below.

 

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;
  • Actual but indirectly relevant arms-length transactions in the underlying interest or related markets;
  • Quotes received from dealers (e.g. deal-able bids and offers); 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 indices are based on a simple average formula, and do not include any editorial intervention.