Re: Softs business

I am completely free on both of those dates (except for a 2 p.m. to 3 p.m.
meeting on 2/27). I would suggest Sara Shackleton of our legal group attend
as well. -- Bob

Robert E. Bruce
Senior Counsel
Enron North America Corp.
T (713) 345-7780
F (713) 646-3393
robert.bruce@enron.com

Janine Juggins@ECT
02/21/2001 11:42 AM

To: Robert Bruce/NA/Enron@Enron
cc: Catharina Clabots/LON/ECT@ECT, Stephen H Douglas/HOU/ECT@ECT
Subject: Softs business

I had a call with Trena McFarland today picking up on earlier discussions
with respect to the structure for the Softs business to be conducted out of
London and New York (please see e:mail of 2/2/01 for detailed discussion of
the alternatives).

Trena said that there was a strong legal preference to use ENA rather than a
new US corporation for the trading activity conducted out of New York, and
that ECTRIC (or EFET LLC) through EEFT would be the principal for UK trading
activity. I understand that the rationale is centred on minimising the number
of ISDAs to be negotiated. I further understand that the overlap in the
counterparty base (Softs and existing customers) is not significant at this
time although it is hoped that this will change over time.

As a result of this Trena is considering establishing parallel books such
that, for example, the London based traders would offer prices on NYBOT
look-alike and the NYBOT/LIFFE spread trades as well as offering prices on
the LIFFE look-alike trades. European counterparties would only be given
access rights via EOL to trade the products offered by London, and N American
counterparties would only be given access rights via EOL to trade the
products offered by New York. The price stack managers for the products will
be separately controlled by each group of traders. The trouble with this
route is that there is the possibility of arbitrage since the products will
have overlapping hours of trading. The possibility of arbitrage would be
restricted to those counterparties which are registered both with London and
New York via EOL and are thus able to see both prices with a bit of collusion
- this would be most likely in the case of a global counterparty which is
operating through one or more branches.

This is only a very brief summary of the discussion and the issue, because I
would like to follow up in more detail in person when I am in Houston next
week. Would you have any time free on Tuesday 27 Feb or Friday 2 March to
discuss this (together with ENA Tax) ?

Thanks
Janine