EML acting as arranger

----- Forwarded by Alan Aronowitz/HOU/ECT on 10/17/2000 11:10 AM -----

Justin Boyd
10/16/2000 10:56 AM

To: Alan Aronowitz/HOU/ECT@ECT
cc:
Subject: EML acting as arranger

Alan

Here's Janine's response..

Justin
---------------------- Forwarded by Justin Boyd/LON/ECT on 16/10/2000 16:58
---------------------------

Janine Juggins
11/10/2000 08:29
To: Justin Boyd/LON/ECT@ECT
cc:

Subject: EML acting as arranger

If EML acts as an arranger in respect of certain large transactions executed
by a Metals affiliate (presumably non-EU - such as Metals New York) the
following tax issues arise:

1. There is a risk that EML will give the Metals affiliate a taxable presence
in the UK - this is exactly the same situation that we have with ECTRIC/EEFT
here we have the risk that ECTRIC will be deemed to have a UK tax presence
because EEFT acts as its dependent agent. We manage this risk by ensuring
that the commission earned by the agent adequately compensates the agent for
the functions it performs in the UK. A better understanding of who would do
what and where is required to formulate a view on this issue.

2. The commission earned by EML should not be subject to US tax (in addition
to UK tax) as (depending on the facts) it will probably be treated as
commission earned by EML in the ordinary course of its business as a
broker/dealer. The services performed by EML will be performed in the UK.
Again, need more info to conclude on this point.

3. Commissions charged by EML to the overseas affiliate should not bear UK
VAT.

Let me know if you need to run through the above in more detail.

Also, are you on this FX call re EOL this afternoon ? Do you have any further
background to it ? I think there are some significant issues.

Regards
Janine