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Enron Mail |
Raymond,
Thank you for your note. It would be great if you could be ready to roll-o= ut=20 Korean Weather in the near future. It would be tough to sell Weather=20 Derivatives in Korea, but the early move can be positive for us especially= =20 because K-Weather, a local weather forecasting company, is also studying=20 Weather Derivatives for potential launch. Regarding the questions you aske= d,=20 please find below my answers in blue. Thanks. Regards, Jae-Moo Raymond Yeow@ENRON_DEVELOPMENT 08/25/2000 04:58 PM To: Matthias Lee/SIN/ECT@ECT@ENRON cc: Jae-Moo Lee/Corp/Enron@ENRON, Christopher B=20 Hunt/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Joseph P Hirl/AP/ENRON@ENRON, Dav= id=20 Forster/Corp/Enron@Enron, John Ambler/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT,= =20 Mike Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruce=20 Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Alan=20 Aronowitz/HOU/ECT@ECT@ENRON, Mike Brown/ENRON@Gateway@ENRON, Justin=20 Timothy/ENRON_DEVELOPMENT, Paul Quilkey/ENRON_DEVELOPMENT, John=20 Viverito/Corp/Enron@Enron, Rousseau Anai/AP/Enron@Enron, John=20 Chismar/SIN/ECT@ECT@ENRON, Victor Santos/ENRON_DEVELOPMENT@ENRON_DEVELOPMEN= T,=20 Li Yin Lim/SIN/ECT@ECT@ENRON, Mark Taylor/HOU/ECT@ECT@ENRON, David=20 Minns/ENRON_DEVELOPMENT, Jonathan Whitehead/AP/Enron@Enron, Michelle=20 Lee/Corp/Enron@Enron, Ann Brown/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Matthi= as=20 Lee/SIN/ECT@ECT@ENRON, Angeline Poon/SIN/ECT@ECT@ENRON, Paul=20 Smith/ENRON_DEVELOPMENT, Christian Werner/ENRON_DEVELOPMENT, Allan=20 Ford/ENRON_DEVELOPMENT=20 Subject: Comments & questions re: EOL Korea =20 To Jae- Moo,=20 1. Impressive P'point presentation indeed. 2. Friday Sep 1 - 800am TYO time is good for Australia, I will be attending is there anything that i need to arrange at our end ?? 3. After the successful roll-out of W for Japan & Oz thus qtr,=20 as discussed - we are ready to roll-out Korean W say in Mid October ??? Your email & presenatation thus arrived at a very good time. 4. Just some questions - You may answer in the conference call or by email -- your choice=20 (a) why has W derivatives been singled out by FSC for potential review=20 when there is no regulation of eg LPG , or plastics swaps & fwds ? (pg 11= =20 of presentation) We are just talking about the theoretical possibility of FSC's (Financial= =20 Supervisory Commission) review of Weather Derivatives because of the novelt= y=20 in Korea although, according to the Kim & Chang report, there are currently= =20 no laws or regulations in Korea that regulate marketing of OTC derivative= =20 transactions through the internet or otherwise. When we talked to FSC a=20 couple of months ago, they confirmed that there is no law or regulation=20 restricting Weather Derivatives in Korea. FSC did not indicate any intenti= on=20 to review Weather Derivatives for regulation, either. In addition,=20 according to the Kim & Chang report, Weather Derivatives would not be=20 considered to be an insurance contract subject to Korean insurance=20 regulations. Kim & Chang also believes that Weather Derivatives should not= =20 be considered gambling or wagering but a legitimate method of hedging risks= =20 relating to weather. (b) How necessary are the meetings with ( pg 5 of presentation) ".. Bank of Korea (BOK)/ Ministry of Finance & Economy (MOFE) for=20 classification of weather derivatives as commodity derivatives.." ? Is this meeting to meet "...except for Foreign Exchange Transaction Regulations (FETR) in case of= =20 foreign currency trades ? Classification of weather derivatives as commodity or financial derivativ= es=20 under FETR needs to be resolved..."(pg 15 of presentation) Can we just do it first with Enron Korea as the counterparty ? If so , if= =20 Korean coy transacts with Enron Korea, there should be no problem in remitting funds wholly within Korea ! Also we intend to offer product in Won only so no FX involved at all . According to the Kim & Chang report, FETR is the only regulation that=20 regulates OTC derivative transactions, and FETR is applicable only when FX = is=20 involved in a transaction or when a transaction is between a Korean residen= t=20 and a non-resident. Thus, as far as we understand based on the Kim & Chang= =20 report and conversations with FSC and other local lawyers, if a transaction= =20 (Weather derivative or other commodity derivative) is between residents in= =20 Korea (e.g., a Korean customer and Enron Korea) in Korean currency (Won),= =20 neither FETR nor any other regulations are applicable. No report or approv= al=20 would be required. =20 ©=20 pg 18 of presentation=20 '...All other EnronOnline products with the exception of bandwidth and=20 emission allowances are classified as commodity derivatives in Korea..." Why is it bandwidth and emission are classified differently? Will not Weather fall under same category ? There is no classification or definition of bandwidth, emission or weather= =20 derivative products in Korea since Korea has no experience in such products= =20 or concepts. Please refer to my previous e-mail to Matt for definitions of= =20 derivative transactions (commodity and financial). "...Commodity derivatives require a prior reporting to the Bank of Korea fo= r=20 each trade .." Is this only relevant if product is not in Won but foreign currency ? The reporting requirement is relevant under the FETR only which is applied= =20 for a transaction with FX involved or between a resident and non-resident i= n=20 Korea. =20 5. pg 28 of presentation=20 Note that Dr Christian Werner - Sydney office will be the person for=20 "Data system =01 For weather derivative products, arrange with a weather= =20 forecasting company for the weather data feed - timing depends on the=20 location" We will provide relevant information for Christian. We will be able to assist with (if reqd, see points 4b & c above) Thanks. = It=20 would be necessary only when we decide to deal with FETR. "...=01 For weather derivatives, arrange presentation meetings with BOK/MO= FE=20 for classification of weather derivatives as commodity derivatives _ May require longer time for their decision making =20 Korea Office, Mike Dahlke, EOL Weather specialist (?)" Best wishes Raymond Matthias Lee@ECT 08/24/2000 09:22 PM To: Jae-Moo Lee/Corp/Enron@ENRON cc: Christopher B Hunt/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ENRON, Joseph P= =20 Hirl/AP/ENRON@ENRON, David Forster/Corp/Enron@Enron, John=20 Ambler/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ENRON, Mike=20 Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ENRON, Bruce=20 Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ENRON, Alan=20 Aronowitz/HOU/ECT@ECT, Mike Brown/ENRON@Gateway@ENRON, Justin=20 Timothy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ENRON, Paul=20 Quilkey/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ENRON, Raymond=20 Yeow/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ENRON, John=20 Viverito/Corp/Enron@Enron, Rousseau Anai/AP/Enron@Enron, John=20 Chismar/SIN/ECT@ECT, Victor Santos/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ENRO= N,=20 Li Yin Lim/SIN/ECT@ECT, Mark Taylor/HOU/ECT@ECT, David=20 Minns/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ENRON, Jonathan=20 Whitehead/AP/Enron@Enron, Michelle Lee/Corp/Enron@Enron, Ann=20 Brown/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT@ENRON, Matthias Lee/SIN/ECT@ECT,= =20 Angeline Poon/SIN/ECT@ECT=20 Subject: Re: EOL Korea =20 Jae-Moo On the section of Regulatory/Legal Environment, it may be useful to note: 1. There is no official rule or regulation that ex post facto reporting for= =20 Commodity Derivatives are acceptable to the Bank of Korea, although your an= d=20 Korean external lawyer's (Kim & Chang) informal verbal enquiries with the= =20 Bank of Korea have suggested they have accepted some 7 or 8 reports since= =20 April last year (all from Hyundai Oil). 2. The Bank of Korea take up to two weeks to review the reports and, as Kim= &=20 Chang has advised, there remains a possibility that the Bank of Korea may= =20 reject the report, although they were not able to advise the grounds on whi= ch=20 a report may be rejected. 3. Although, a foreign counterparty need not file a report or seek approval= ,=20 the Korean counterparty must still do so for the benefit and interest of th= e=20 foreign counterparty. Kim & Chang advised that where reporting or approval = is=20 required but is not made or obtained, the Korean counterparty would not be= =20 able to remit its payments under the transaction. This would clearly impact= =20 on the settlement of the transaction, in particular shorter term deals sinc= e=20 reporting and approval may take several weeks.=20 4. The Supreme Court of Korea has ruled that a foreign exchange authorizati= on=20 that was originally required should be obtained in order for a foreign part= y=20 to execute any judgment against the Korean party and remit the proceeds.=20 Regards Matt Jae-Moo Lee@ENRON 08/24/2000 04:58 PM To: Christopher B Hunt/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Joseph P=20 Hirl/AP/ENRON@ENRON, David Forster/Corp/Enron@Enron, John=20 Ambler/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mike=20 Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruce=20 Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Alan Aronowitz/HOU/ECT@ECT,= =20 Mike Brown/ENRON@Gateway, Justin Timothy/ENRON_DEVELOPMENT@ENRON_DEVELOPMEN= T,=20 Paul Quilkey/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Raymond=20 Yeow/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John Viverito/Corp/Enron@Enron,= =20 Rousseau Anai/AP/Enron@Enron, John Chismar/SIN/ECT@ECT, Victor=20 Santos/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Li Yin Lim/SIN/ECT@ECT, Mark=20 Taylor/HOU/ECT@ECT, Matthias Lee/SIN/ECT@ECT, David=20 Minns/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jonathan Whitehead/AP/Enron@Enro= n cc: Michelle Lee/Corp/Enron@Enron, Ann=20 Brown/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT=20 Subject: EOL Korea As many of you are aware, over the past few months we have been investigati= ng=20 whether or not it would make sense to seriously consider an EOL launch in= =20 Korea from a market, regulatory and legal perspective. The primary interes= t=20 has been on reviewing whether or not we could launch existing products in= =20 Korea (e.g., products already handled by Singapore EOL) as well as new=20 products (e.g., Seoul weather).=20 This initial work was directed primarily by the Korea team working within t= he=20 APACHI group. If a launch is to progress much further from this point,=20 however, substantial attention by the EOL team would be required. To=20 facilitate this, the attached presentation summarizes our primary findings = to=20 date and some of our thoughts. We would appreciate your taking a look at t= he=20 attached document. We would like to arrange a conference call for next Thursday (Aug. 31st) at= =20 6:00 pm by Houston time (Friday at 8:00 am by Tokyo time) to discuss the=20 attached document and to solicit thoughts as to next steps. Please let me= =20 know whether you will be able to join this call or, if you have a conflict,= =20 an alternative time. Your participation will be greatly appreciated. =20 Best regards, Jae-Moo
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