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Enron Mail |
My comments on the floating price source language follows:
US NG BasisSwp Chicago The floating price is shown to be equal to the "monthly average" price published in NGI's Bidweek Survey. The floating price is more appropriately described as the "Bidweek Average" price. This appears to be an oversight on Dynegydirect's part since their description for US NG BasisSwp SCalBrd correctly describes the price as the "bidweek average" price. Any Gas Daily daily midpoint price description The floating price is shown to be equal to the "midpoint price published in the applicable issue". Gas Daily is not published on weekends or holiday, therefore the question arises as to the pricing mechanism Dynegydirect will use for those days. We add the phrase to our floating price description as follows to answer that point: "if a calendar day is not a businress day then the price for such day will be the Midpoint price published on the next succeeding business day" From: Brent Hendry@ENRON on 11/29/2000 12:28 PM To: Leslie Hansen/HOU/ECT@ECT cc: Mark Taylor/HOU/ECT@ECT, Bob Bowen/HOU/ECT@ECT Subject: DynegyDirect Leslie, The following comments are with respect to all Basis Swap product descriptions on the DynegyDirect trading web site. 1. The reference to the "fixed price" is incorrect as it references the basis spread price specified on the trading screen rather than the second floating price which should be one of the NYMEX futures contracts. This is a structural error that was carried through all the basis swap definitions and should be fixed to avoid ambiguity or future arguments over what was intended. 2. In the new definition of "fixed price" all references should be made to either the NYMEX Henry Hub or Permian Basin futures contracts for the applicable Determination Period rather than to the "appropriate NYMEX futures contract". Otherwise it will not be clear which natural gas futures contract is being referred to. 3. While there is a default definition in the Master Agreement it would be preferable to define "Determination Period" in the product description by adding the following sentence, "Each calendar month during the term of the Transaction will be a Determination Period." 4. The sentence specifying the definition of the "Price" should specify that the "Price is the differential between the Floating Price and the Fixed Price (or Fixed Price and the Floating Price). 5. The sentence relating to payment dates should specify that the amounts owed should be paid no later than "five business days after the Floating Price and the Fixed Price are published." I would suggest that Dynegy borrow the language from our long product descriptions on EOL. The following comments are with respect to the "FP Swap NYMEX" product descriptions. 1. In the definition of the "floating price" all references should be made to either the NYMEX Henry Hub or Permian Basin futures contract for the applicable Determination Period rather than to the "appropriate NYMEX futures contract". It is not clear which natural gas futures contract is being referenced. 2. While there is a default definition in the Master Agreement it would be preferable to define "Determination Period" in the product description by adding the following sentence, "Each calendar month during the term of the Transaction will be a Determination Period." As we do not have a master agreement in place with Dynegy Liquids Marketing & Trade I would not approve trading in the liquids financial products including the "C2 Swap Fix OPIS C2 MON" and "NC4ISO Swap Fix OPIS NON MON" products until either a master is agreed to or the GTC form of master is approved. Please let us know if the commercial team wants to pursue trading these products. Bob has agreed to review the definitions of the floating prices to ensure that they correctly identify the floating price sources. I will forward him copies of the long form descriptions today. Other than having Bob check the floating price source language I do not have any comments on the two swingswap definitions. Please let me know if you have any questions or comments. Regards, Brent
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