RE: How to Handle "Oops" Trades on EnronOnline

I do not agree with this approach. We are so busy managing stacks which could lead to someone forgetting to inform settlements to send a termination letter which would then kill the trade. I strongly object to your recommended approach.

-----Original Message-----
From: Hansen, Leslie
Sent: Friday, July 13, 2001 1:11 PM
To: Presto, Kevin M.
Cc: Murphy, Melissa Ann; Sager, Elizabeth
Subject: How to Handle "Oops" Trades on EnronOnline

Kevin:

From time to time, we are notified that one of our traders has mistakenly posted a trade on EnronOnline or that a counterparty hit a bid or offer on EnronOnline by mistake. In the past, the traders were instructed that if such an "oops" trade occurred, they should enter into an offsetting trade with the counterparty. Confirmations would then be sent out for each of the offsetting transactions. Several counterparties have objected to receiving confirmations for such transactions, and from Enron's perspective, entering into offsetting transactions is less than optimal.

Accordingly, for all future oops trades, the traders should be instructed NOT to enter into an offsetting transaction. Instead, I recommend that our traders take the following steps:

A. If both traders agree that an oops trade has occurred,

1. Agree to terminate the transaction and let the counterparty know that we will send a short written termination agreement.

2. Notify Melissa Murphy at *31886 that the transaction has been terminated. Melissa will make the appropriate entry in Enpower and will notify me so that I can prepare the termination letter.

B. If the counterparty makes the mistake, we are not required to terminate the trade. The counterparty agreed to be bound by the terms of its EnronOnline trades when it accepted the Electronic Trading Agreement. It is up to our trader to decide whether to agree to terminate the trade. Our trader can agree to terminate the trade only in exchange for some form of compensation, for example.

C. If our trader made the mistake and the counterparty refuses to terminate the trade, give me a call so that we can discuss the options.

Please give me a call at your convenience to discuss.

Regards,

Leslie
*36121