Coal Indexation and the TFS API Coal Indices
London, 18 December, 2006 – The London office of TFS Energy, a global leader in interdealer broking, today called for more transparency in coal indexation methodology and for the inclusion of Platts coal assessments in its TFS API#2 and TFS API #4 coal indices following the Argus Webinar on coal indexation methodology on 12/12/06.
TFS formed the "TFS API" indices in January 1998 and continues to own the brand name under which Argus/McCloskey/Barlow Jonker distribute their coal benchmarking data.
TFS was pleased to recently see another coal derivative broker address the methodology of the API’s. While believing totally mechanical indices are inherently unreliable, TFS encourages the data suppliers on the TFS index brand to embrace robustness and transparency within the bounds of survey benchmarking in the journalistic environment.
In 2001, TFS released a methodology to market participants and data suppliers to the TFS API index brand. The methodology had several innovative features, including top and tailing of input prices to eliminate/dampen gaming, an 80% weighting to double-verified volume-weighted physical transactions when they occur, a 20% weighting of a price survey, balance in the survey group and other features to increase transparency and robustness.
TFS believes if this methodology had been fully taken up by Argus/McCloskey/Barlow Jonker, the coal industry would be even more comfortable with the indices.
TFS still considers the TFS API’s and survey-based benchmarking (specifically from the likes of Argus/McCloskey/Barlow Jonker and Platts) as the best way to generate a coal index for seaborne trade.
Platts incorporated many of the features of the TFS methodology in its CIM indices. TFS believes the inclusion of Platts coal assessments in TFS API#2 and TFS API#4 would further broaden the process of data collection and strengthen the indices.
TFS Energy has coal desks in London, New York and Sydney. For more information on TFS indexation methodology, please e-mail coal@tfsbrokers.com.
Inquiries
Peter Sceats, Consultant Director of Business Development
peter.sceats@tfsbrokers.com
Jennifer Van Hofwegen, Head of Marketing and Communications +1.212.791.6491