Developing and cultivating industry standards is a vital aspect of the Coal Trading Association’s (CTA’s) core mission. The organization has long advocated the establishment of commercial trading standards as a paramount concern when seeking to create market liquidity. In 2000 the CTA took a significant step towards contract and product standardization when it rolled out its first Master Coal Purchase and Sales Agreement (MCPSA) template. The document, a collaborative effort of producers, traders, and end-users, sought to eliminate contractual risk and provide performance assurances between counterparties. The 2000 MCPSA was widely circulated and provided a generic roadmap for entities to begin negotiating company specific master agreements.
Although serving as the industry’s most widely circulated bilateral coal contract for more than five years, the 2000 MCPSA was in need of a minor revision to address new physical/financial market issues never contemplated by the original architects. As a result, CTA members received the first draft of a proposed revised Master Agreement at the 2005 Annual Meeting. After receiving initial positive feedback, the CTA Board assigned the project to the OTC Master Agreement Subcommittee, which subsequently was approached by representatives of the Edison Electric Institute's Drafting Committee. The combined team sought to create one single source document which mirrored the new EEI Coal Annex to the CTA Master Agreement.
Over the course of the next 12 months, the OTC Master Agreement Subcommittee, in conjunction with the EEI Drafting committee, collected countless questions and proceeded to revise the Master Agreement based on diverse issues raised by industry participants. The end document was submitted to the general membership body at the 2006 CTA Annual Business Meeting in New York and ratified.
The CTA will continue to vigilantly provide periodic reviews of new standards for further contract revisions as the market warrants.
2006 Master Coal Purchase and Sale Agreement Click here for information on this document, which the CTA membership adopted in December 2006.
