New Canadian EOL Product

Greg:

2 Issues - an easy language issue and a more complicated regulatory issue.

First the easy one.

It seems to me that since the weekend language says to use the preceding
business day that these two sentences will always result in the preceding
business day's price being used, regardless of whether the holiday is a
Monday or a Friday:

If a statutory holiday falls on a Monday or a Friday, the Enron Daily Index
for such day shall be the Enron Daily Index for the weekend occurring closest
to such day. If a statutory holiday falls on a Tuesday, Wednesday or
Thursday, the Enron Daily Index for such day shall be the Enron Daily Index
for the previous business day.

If that's what's intended, I don't think we need these lines (it's all
covered int he prior parenthetical). If we mean something else I don't think
this language works.

Otherwise the language all looked fine.

The harder issue is the US regulatory one. The CFTC gives a higher level of
scrutiny to electronic systems that provide not only trading but also price
discovery. That's why we don't refer to the EnronOnline prices reported on
the system as "indices" but just average prices. We may be OK here since
this is a Canadian price (although its availability to US cutomers my sink
us) and it is only for trades where Enron is a party. I've got a call in to
our CFTC counsel asking for thier take on this and will let you know as soon
as I hear back (he's pretty quick at responding so I expect it should be this
afternoon).

Mark
----- Forwarded by Mark Taylor/HOU/ECT on 02/14/2001 10:24 AM -----

Dianne Seib
02/13/2001 11:44 AM

To: Mark Taylor/HOU/ECT@ECT
cc: Greg Johnston/CAL/ECT@ECT
Subject: New Canadian EOL Product

Mark,

At Greg Johnston's request, I am forwarding to you copies of two proposed EOL
products the Canada office would like to set up for trading on EnronOnline.
Both products are financial and are using the EnronOnline derived daily index
price. Please let Greg know if these products are approved for trading. In
the meantime, I have forwarded copies to the EOL team in order that they can
start working on setting the product up for trading.

Thanks!

Dianne