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Enron Mail |
This is excellent -- please put a copy in our SFA compliance file. Thanks!
Paul Simons 08/07/99 14:03 To: ECT London cc: (bcc: Scott Sefton/LON/ECT) Subject: SFA Update: Who can we trade derivatives with? This month we are going to look briefly at the types of counterparty with which we can trade derivatives in (or from) the UK under SFA (and CFTC) rules, and at the principle of selling to them only products which are "suitable". Eligible Counterparties All derivatives trading in the UK (as you know) must be conducted through Enron Europe Finance & Trading Limited, ("EEFT"), which always acts as agent. EEFT may arrange derivatives transactions only with "eligible" counterparties. In general, an "eligible counterparty" is either: (i) an investment bank that is regulated by SFA (such as Bankers Trust or Morgan Stanley) or an overseas dealer in commodity derivatives authorised by its local regulator; or (ii) a company that has (or whose holding company has) total assets in excess of $10,000,000 (approximately o6,500,000); and either (a) 20 or more shareholders and a paid up share capital or net assets of at least o500,000; or (b) fewer than 20 shareholders and a paid up share capital or net assets of at least o5,000,000. Other types of entity may qualify as an "eligible" counterparty, but please consult with the Legal Department in these cases. Suitability Requirements In addition to the above, each EEFT Registered Representative should understand and apply the customer suitability principles that have been adopted by ECT. These principles require that Registered Representatives only offer products which are suitable for each counterparty, taking into account its level of expertise and the use which the product serve. This means that in the case of less sophisticated counterparties or more complex/exotic products (or both) extra caution needs to be exercised. It is also essential in all cases that no misleading statements are made (orally or in writing). Best regards Paul
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