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Enron Mail |
William,
I work in the London tax group and Dale has asked me to send a few lines to explain the position with respect to the internal FX products to be offered via EOL. 1. The internal FX products offered by the FX desk in London will be offered by RMT acting through the UK regulated agent EEFT. The activities of the FX desk in London are currently covered by a services agreement between EEFT and ENA (this will be extended to include RMT for internal trades). 2. The internal FX products offered by the FX desk in Tokyo will need to be offered by Enron Japan Corp KK. Note that Enron Japan Corp KK will then back the transactions into RMT, leaving a spread in Enron Japan Corp KK of 2.5bps. A couple of comments on the difference in structure between Tokyo and London - we established that a services agreement structure would not be acceptable for Japanese tax purposes. This is why we are recommending a back to back structure using Enron Japan Corp KK. We pushed the Japanese tax advisors very hard on this point, because this structure will also be needed for external trades - there are a number of knock on effects, such as potentially increased credit costs, more ISDAs (since external parties dealing with Tokyo will be dealing with Enron Japan Corp KK and not ENA). because this is a cross border transaction the spread left in Japan needs to approximate the spread which would be earned by an unrelated party executing similar transactions - the spread of 2.5bps was provided to us by Enron Japan based on their review of market spreads. Note it should be possible to ensure that this spread rolls up to Global Markets for management reporting purposes, whilst leaving it in Japan for financial and legal purposes. I can therefore confirm that for Tax all remaining questions have now been addressed, so there is no reason for further delay from our side. If you need to discuss the above further please call me in the office on 44 207 783 5326 or on my mobile 44 77 88 43 71 95. Regards Janine
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