From: mark.elliott@enron.com
To: bob.crane@enron.com, mark.taylor@enron.com
Cc: jannine.juggins@enron.com, paul.simons@enron.com, martin.holmes@enron.com, steve.kim@enron.com
Date: 2000-01-17 16:25:00+00:00
Subject: Proposed trading through London onto the OMLX Pulpex Index

Bob / Mark,

Since our recent discussions over the above, I have checked the situation out 
extensively with the OMLX and it appears that the best solution would now be 
the following:

1. Enron Capital & Trade Resources International Corp. ("ECTRIC"), the 
Delaware incorporated company, becomes  a member of the OMLX (either as a 
pure Proprietary trader or as  a Market Maker - see point (a) below - Bob you 
need to advise me what you want here).

2. Enron Europe Finance & Trading Limited ("EEFT"), the English SFA-regulated 
company which acts as agent / arranger for ECTRIC, then, via EEFT's staff in 
London, places ECTRIC's bids / offers onto the Pulpex Index in the name of 
and for the account of ECTRIC.  Acting purely in this "arranging" manner, 
EEFT itself would not be a member of the OMLX in any capacity.

3. Please note that if Steve is going to be the EEFT person in London who 
would place such orders onto Pulpex in the name of, and for the account of,  
ECTRIC, then Steve will need to become a "Registered Representative" of EEFT 
with the SFA before he can place such orders.  As you know, this status may 
either be gained by Steve passing an examination or by certain length of 
experience in the market.  I shall need to sort this out with Steve if you 
decide to do this.

4. Once EEFT has placed a bid / offer onto the Exchange in the name of, and 
for the account of, ECTRIC as the Member, if that gets "hit", then we can 
give-up that contract immediately to ENA's account under the Exchange's 
give-up procedure.          

Points to note:

(a) ECTRIC could join the OMLX as either a Market Maker or as a Proprietary 
Trader.  Clearly, if ECTRIC joined as a Market Maker, ECTRIC (through EEFT in 
London) would be obliged to make firm two way bids / offers for 2 1/4 hours 
during market opening hours - but so would ENA out of Houston which also has 
Market Maker status. Hence, Enron would have two sets of MM obligations, one 
with ENA and the other with ECTRIC (through EEFT in London).  Bob - Do you 
want this??  Or would you prefer to leave the Market Making obligations with 
ENA and just have ECTRIC as a Proprietary Trader??  The Exchange (Derek 
Oliver) assures me that that there is no difference in the information 
available to MMs as opposed to Prop Traders and Prop Traders can post bids 
and offers as well as hit others bids and offers.  The only difference 
therefore is that a Prop Trader  does not have the obligation to post bids 
and offers during market hours.  Please let me know.

(b) If we go this route, the OMLX would like comfort from ECTRIC's external 
US counsel  that ECTRIC would not be in breach of any US regulations by 
adopting the above structure.  In obtaining this advice, we shall need to 
bear in mind whether, in acting on behalf of ECTRIC, EEFT in London will 
place orders by electronic link or  by telephonic link (as is presently the 
case from Houston).  Mark, are you able to obtain this advice??  Please let 
me know.

(c)   From discussions with Jannine of Tax Dept., there are tax implications 
to any form of trading through London for the US, although these are not 
insurmountable.  Jannine will no doubt write you a separate e-mail with 
regard to the cost of doing such business from a Tax perspective and you 
should bear the contents of that in mind before deciding whether or not to 
proceed.  

Kind regards

Mark