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Enron Mail |
Bob / Mark,
Since our recent discussions over the above, I have checked the situation out extensively with the OMLX and it appears that the best solution would now be the following: 1. Enron Capital & Trade Resources International Corp. ("ECTRIC"), the Delaware incorporated company, becomes a member of the OMLX (either as a pure Proprietary trader or as a Market Maker - see point (a) below - Bob you need to advise me what you want here). 2. Enron Europe Finance & Trading Limited ("EEFT"), the English SFA-regulated company which acts as agent / arranger for ECTRIC, then, via EEFT's staff in London, places ECTRIC's bids / offers onto the Pulpex Index in the name of and for the account of ECTRIC. Acting purely in this "arranging" manner, EEFT itself would not be a member of the OMLX in any capacity. 3. Please note that if Steve is going to be the EEFT person in London who would place such orders onto Pulpex in the name of, and for the account of, ECTRIC, then Steve will need to become a "Registered Representative" of EEFT with the SFA before he can place such orders. As you know, this status may either be gained by Steve passing an examination or by certain length of experience in the market. I shall need to sort this out with Steve if you decide to do this. 4. Once EEFT has placed a bid / offer onto the Exchange in the name of, and for the account of, ECTRIC as the Member, if that gets "hit", then we can give-up that contract immediately to ENA's account under the Exchange's give-up procedure. Points to note: (a) ECTRIC could join the OMLX as either a Market Maker or as a Proprietary Trader. Clearly, if ECTRIC joined as a Market Maker, ECTRIC (through EEFT in London) would be obliged to make firm two way bids / offers for 2 1/4 hours during market opening hours - but so would ENA out of Houston which also has Market Maker status. Hence, Enron would have two sets of MM obligations, one with ENA and the other with ECTRIC (through EEFT in London). Bob - Do you want this?? Or would you prefer to leave the Market Making obligations with ENA and just have ECTRIC as a Proprietary Trader?? The Exchange (Derek Oliver) assures me that that there is no difference in the information available to MMs as opposed to Prop Traders and Prop Traders can post bids and offers as well as hit others bids and offers. The only difference therefore is that a Prop Trader does not have the obligation to post bids and offers during market hours. Please let me know. (b) If we go this route, the OMLX would like comfort from ECTRIC's external US counsel that ECTRIC would not be in breach of any US regulations by adopting the above structure. In obtaining this advice, we shall need to bear in mind whether, in acting on behalf of ECTRIC, EEFT in London will place orders by electronic link or by telephonic link (as is presently the case from Houston). Mark, are you able to obtain this advice?? Please let me know. © From discussions with Jannine of Tax Dept., there are tax implications to any form of trading through London for the US, although these are not insurmountable. Jannine will no doubt write you a separate e-mail with regard to the cost of doing such business from a Tax perspective and you should bear the contents of that in mind before deciding whether or not to proceed. Kind regards Mark
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