Re: Hong Kong Weather Products

I concur in David's analysis. Any idea who the target market is in HK? If
we have specific customers in mind, would it be possible to approach them
directly rather than making the password application generally available?
It's not clear to me that even that would solve the problem since there would
still be some targeted HK residents, just not the public.

David Minns@ENRON_DEVELOPMENT
11/12/2000 08:14 PM

To: Amita Gosalia/LON/ECT@ECT, David Forster@ECT
cc: Paul Smith/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ECT, Dale
Neuner/HOU/ECT@ECT, Justin Timothy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ECT,
Mark Taylor/HOU/ECT@ECT, Justin Boyd/LON/ECT@ECT, Jonathan
Marsh/EU/Enron@Enron@ECT
Subject: Re: Hong Kong Weather Products

There is one issue outstanding concerning our due diligence for Hong Kong. It
does not relate specifically to Hong Kong weather but rather whether we
should revisit the decision to last month list a Hong Kong Password
Application on the EOL registration screen. As I raised in my email last week
the Hong Kong regulator (SFC) has issued internet trading guidelines that
state that internet sites that "target" Hong Kong residents will be expected
to comply with HK securities legislation.

Under the HK Protection of Investors Ordinance there are restrictions on
making public offers regarding (i) securities; and (ii) "investment
arrangements relating to property other than securities". Whilst it is
difficult to see how a HK weather swap (or any other product listed on EOL )
would fall with in these definitions it is not beyond doubt that the SFC may
want to investigate EOL if they believe it is targeting offers to Hong Kong
residents. My concern is that if the SFC logged onto EOL following the
publicity surrounding the HK weather launch they will find a password
application for Hong Kong residents. The SFC could well take the view that a
HK password application is evidence that EOL is targeting Hong Kong. Again it
is the act of making the offer, not entering into the transaction that is the
subject of the Ordinance. Hence arrangements to restrict with whom we
ultimately enter into password agreements or conduct trades may not be
viewed as conclusive in determining to whom offers are being made.

l have had an opportunity to review a 27 September 2000 advice that Jonathan
Marsh obtained from Allen Overy (HK). In Section 2 they raise similar
concerns with regard to the Protection of Investors Ordinance.

Way Forward

I would recommend that the Password Application for Hong Kong immediately be
removed from the list on the EOL registration screen, at least for the
present. The chance that this HK PA may invite the attention of the HK SFC
needs to be recognised. (This possibility exists irrespective of the
decision to list HK weather products. Clearly on a practical level a greater
awareness in HK of EOL generated by the launch of HK weather may be the
catalyst that attracts SFC interest.) Whilst our legal analysis has not
identified any breach of HK legislation by EOL I would prefer if we
mitigated the risk of an SFC instigated dialogue on this point.

This would mean a Hong Kong resident would need to call up to get a password
application.

If we wish to include on the parts of the EOL site that are available to the
public (ie where no password is needed) provisions that are unambiguously
directed to HK residents then it would be prudent for us to talk to the SFC
first. I note Allen & Overy also raised this as a possibility.

I recognise this is a judgment call on what is one of those grey areas. But
the prospect of publicity in HK for EOL was the determining factor in
concluding that this more conservative approach is warranted at present.

Amita Gosalia@ECT
13/11/2000 07:04 AM
To: Paul Smith/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Dale Neuner/HOU/ECT@ECT, Jennifer deBoisblanc Denny/HOU/ECT@ECT, Justin
Timothy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Melba Lozano/HOU/ECT@ECT, Robert
B Cass/HOU/ECT@ECT, David Forster/Corp/Enron@Enron, David
Minns/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mark Taylor/HOU/ECT@ECT, Justin
Boyd/LON/ECT@ECT, Jonathan Marsh/EU/Enron@Enron

Subject: Re: Hong Kong Weather Products

Hi Guys

Have checked the outstanding item with Jonathan Marsh. Jonathan's view was
that the legal due diligence conducted by Mallesons provided the relevant
information. Media coverage of launch of weather products based in HK may
lead to review by the HK regulator.

OK to proceed.

Regards
Amita

From: Paul Smith@ENRON_DEVELOPMENT on 11/11/2000 08:05 ZE10
To: Dale Neuner/HOU/ECT@ECT
cc: Jennifer deBoisblanc Denny/HOU/ECT@ECT, Justin
Timothy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Melba Lozano/HOU/ECT@ECT, Robert
B Cass/HOU/ECT@ECT, David Forster@ECT, Amita Gosalia@ECT, David
Minns/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mark Taylor@ECT

Subject: Re: Hong Kong Weather Products

Dale,

What is the legality issue that needs to be addressed by Amita regarding
offerring HK Weather products. David Minns and Mark Taylor have completed all
the legal checking and sign-off required for this product launch.

Regards,
Paul

Dale Neuner@ECT
11/11/2000 08:58 AM

To: Paul Smith/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Justin
Timothy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Melba Lozano/HOU/ECT@ECT, Robert B Cass/HOU/ECT@ECT, Jennifer
deBoisblanc Denny/HOU/ECT@ECT
Subject: Re: Hong Kong Weather Products

I have created some Hong Kong weather Products in Production for your review.
You will find them in the Product Manager; 34991 and 34992.

Since we are still waiting on a response from Amita regarding the 'legality'
issue of offering Hong Kong Products, I have not made the necessary changes
to the Australia static data components nor have I 'squirrelled' the AUS
products. Once the go ahead has been given, we will release the ticker item,
update the AUS Static Data components, secret squirrel the AUD Products, and
move the Hong Kong Products into Active in the Product Manager.

In the interim, please feel free to amend the Hong Kong Products that I added
and add the additional Products that you may need.

Dale
3-9746

From: Paul Smith@ENRON_DEVELOPMENT on 11/10/2000 01:05 PM ZE10
To: Dale Neuner@ECT
cc: Justin Timothy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
Subject: Hong Kong Weather Products

Dale,

I can't see the HK Weather Products in Stack, Product or Data Manager. This
may be to do with my permissioning. In the absense of Justin, can you pls
check.

Regards,
Paul