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Enron Mail |
Ian, I am not aware of restrictions which trading the products places upon a
Canadian counterparty. Of course, legal issues which would ordinarily attach to any Canadian trading counterparty, regardless of the product, need to be considered. These would include, primarily: 1. corporate capacity, including the "ultra vires" doctrine as it might apply to a non-Business Corporations Act corporation (for example, a Canadian counterparty under a Companies Act regime), statutory corporations such as municipalities and Crown corporations, and regulated entities such as utilities; and 2. compliance with the Securities Act of Alberta and the Securities Act of British Columbia, to the extent they are applicable to the counterparty. In the case of the latter, there was a movement approximately 18 months ago initiated by the Alberta Securities Commission and largely followed by the British Columbia Securities Commission to try to regulate physical and financial derivatives trading. It was generally realised that the amendments, which essentially made physical and financial derivatives "securities" for the purposes of these acts, was ill-conceived as it was not clear, for instance, how certain aspects of the securities legislation applied. (For example, who is the "issuer", who is the "purchaser", how the "special relationship"/"insider trading" restrictions applied, and the applicability of the prospectus and registration requirements each time a trade was entered into.) Accordingly, the Alberta Securities Commission and, subsequently, the B.C. Securities Commission issued exempting orders which, for specified types of parties, largely exempted the application of the Alberta Securities Act (in total) and the B.C. Securities Act (only to the extent of the prospectus and registration requirements). Any trading counterparty that we would transact with would almost certainly fit within these exemption orders; however, it is nonetheless appropriate to obtain a representation and warranty from the counterparty that the counterparty is a "Qualified Person" under these orders. I would suggest that you contact Mark Powell of my office at 403-974-6708, and Mark can send to you the text of the representation we customarily obtain in our trading agreements, as well as copies of the exemption orders such that you can understand that nature of the exemptions. Finally, Ontario was contemplating a similar amendment to the Securities Act of Ontario, but has recently announced that it is holding off doing so. Regards, Peter Ian Brungs@ENRON 01/16/2001 12:05 PM To: Mark Taylor/HOU/ECT@ECT, Peter Keohane/CAL/ECT@ECT, David Minns/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt cc: Justin Boyd/LON/ECT@ECT Subject: Bullion Trading Dear Mark, Peter and David, Justin and I have now carried out the legal due diligence necessary to trade Bullion on EnronOnline with counterparties based in Sweden, Switzerland and South Africa. We intend to launch two products; a spot forward contract (based on a price fixed by our traders that is linked to the current traded price on the Reuters page) in both gold and silver. These trades are all cleared, by paper transfer, through the London Bullion Clearing System, and for this purpose each contracting party is required to appoint a Clearing member. There are a total of 7 Clearing members, all of which are banks or similar financial institutions, and all of which are regulated by the Bank of England. The Enron counterparty to each trade will be Enron Capital & Trade Resources International Corp. (as arranged by Enron Europe Finance & Trading Limited, the SFA regulated entity). Settlement will occur through the crediting or debiting of an unallocated gold account and the corresponding debiting or crediting of a cash account. Please would you advise whether trading with counterparties from your jurisdiction(s) in such products would give rise to any specific legal issues. The jurisdictions which I believe would fall under your remit are as follows: Mark: USA Peru Mexico Peter: Canada David: Australia If you have any questions or concerns please do not hesitate to contact either Justin or myself. Kind Regards, Ian Brungs
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