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Enron Mail |
ALL:
Just to clarify a couple of points: Paul/Denis below have clearly highlighted that london group cannot trade on behalf of ENA. I understand that the First Union trade was done as they had an agreement in place with ENA but not .Com. Bearing in mind, that London traders have transacted on behalf of ENA, I expect that we should BTB these trades with .Com ? (Paul/Denis) If so, I suggest going forward that where we have to do a trade for ENA we get Mozam to do it with Markus' approval as he is based in Houston. Assuming that we get the service agreement in place, we can do the risk mgmt from London. If we do it like this then all other issues go away with the exception of service agreements which need to be put in place. I do not believe that it is correct to say that there is only one book. (Paul) We currently have one business,two books: one in london, one in houston. Each trade is booked against a specific book. Bryan is quite happy to have risk reside in each book assuming legal/tax/regulatory compliance. There is NO other reason for BTB that I am aware of. All risk managment takes place here. However we will not be able to pay out of ENA accounts and will have to request them to do so. It is quite clear that we have the necessary understanding of the issues to resolve so let's get this done ASAP. Bryan can you ask Mary to arrange a meeting for Thurs/Fri. Paul do you wish to conference in Houston on this ? Regards Dave Janine Juggins 12/06/2000 19:56 To: Paul Simons/LON/ECT@ECT cc: Denis O'Connell/LON/ECT@ECT, Bryan Seyfried/LON/ECT@ECT, Elaine Bannerman-Sowah/LON/ECT@ECT, David A Wall/Risk Mgmt/LON/ECT@ECT, Mark Taylor/HOU/ECT@ECT, Erica Gut/LON/ECT@ECT, Mahesh Lakhani/LON/ECT@ECT Subject: Re: ENA / Enron Credit.com The scenario outlined by Denis is consistent with advice previously provided by the Tax group. London based traders should be executing deals in the name of Enron Credit.com Ltd (not ENA.) Houston based traders should be executing transactions in the name of ENA (not Enron Credit.com Ltd). Back to back transactions to transfer all positions to Enron Credit.com Ltd will simplify financial and tax reporting if ENA will on a regular basis be laying off positions acquired by Enron Credit.com Ltd. If ENA is simply laying off positions acquired by ENA then strictly there is no need for the back to back. Assuming that all positions are in fact backed to Enron Credit.com Ltd an agreed spread or fee will need to be awarded to ENA to compensate them for their activity and risk assumed. Please note that Erica Gut and Mahesh Lakhani will be providing tax support for the credit trading group in the future and they will work with Denis to put the appropriate service agreements/fee arrangements in place. Regards Janine Paul Simons 12/06/2000 17:41 To: Denis O'Connell/LON/ECT@ECT cc: Bryan Seyfried/LON/ECT@ECT, Elaine Bannerman-Sowah/LON/ECT@ECT, David A Wall/Risk Mgmt/LON/ECT@ECT, Mark Taylor/HOU/ECT@ECT, Janine Juggins/LON/ECT@ECT Subject: Re: ENA / Enron Credit.com I agree with Denis' remarks especially about there being a single book and hence the need for matching terms and back-to-back trades. From a regulatory perspective, you don't want to book ENA's trades in London since it is not authorised to deals here and is not acting through EEFT, our SFA regulated entity. Hope this helps Paul Denis O'Connell 12/06/2000 14:01 To: Bryan Seyfried/LON/ECT@ECT cc: Elaine Bannerman-Sowah/LON/ECT@ECT, David A Wall/Risk Mgmt/LON/ECT@ECT, Paul Simons/LON/ECT@ECT, Mark Taylor/HOU/ECT@ECT, Janine Juggins/LON/ECT@ECT Subject: Re: ENA / Enron Credit.com As I understand it from a tax and legal perspectibe transactions booked in ENA should be executed by a trader sitting in Houston. As far as I am aware there is no brokerage or agency arrangement with either EFT or EnronCredit.com in this regard and therefore traders sitting in London should not execute these transactions independently of the traders sitting in Houston. From a booking perspective in this type of situation generally a separate trading book should be mainatined by ENA. It may be acceptable for EnronCredit.com to risk manage ENA's credit derivaties postions provided the requisite service agreement has been put in place - this is really a question for ENA - Mark ?. I do not know if such a service agreement is in place. Where a transaction is booked into ENA and not bt-backed with .Com the market risk will reside with ENA - a btb with .Com would be necessary to consolidate the mtm of the ENA credit derivatives business in .Com. In view of the fact that Bryan is viewing all credit derivatives business as a global book, all credit derivatives business entered into by Enron entities other than EnronCredit.com should be back-to-backed with .Com. In situations where ENA has sold protection and .Com has bought protection on the same name this internal structure will permit ENA immediately Delivering on the Portfolio of Deliverable Obligations it as received as the Seller of protection to .Com which can in turn can Deliver on to the counterparty it has bought protection from. As a result all hedged trandsactions should have matched terms regardless of the Enron booking entity. Mark, Paul can you add further clarification as to the position (particularly where I haven't hit the mark !). tks, Denis Bryan Seyfried 11/06/2000 13:57 To: Elaine Bannerman-Sowah/LON/ECT@ECT cc: Denis O'Connell/LON/ECT@ECT, David A Wall/Risk Mgmt/LON/ECT@ECT Subject: Re: ENA / Enron Credit.com In reality, I think of there being a single global book and terms should match across internal legal entities. The only reason for booking into two separate entities is for Tax and/or regulatory reasons. The risk is managed out of London, I don't think there is any reason to back-to-back trades into EnronCredit.com but will defer to the appropriate tax, legal and control personnel. I don't think a services agreement has been set up yet. We should try to close the open issues next week. Could you coordinate the relevant parties to ensure satisfactory results. thanks. Elaine Bannerman-Sowah 09/06/2000 14:44 To: Bryan Seyfried/LON/ECT@ECT cc: Denis O'Connell/LON/ECT@ECT Subject: ENA / Enron Credit.com Bryan Please could you confirm that CDS trades done by ENA : 1.can be booked in London; 2. risk-managed in London 3. do not have to be back-to-backed with Enron Credit.com 4. there is a Service Agreement between the two entities. My understanding of this is that we would not need to match the terms of transactions, for example where ENA has sold protection and Enron Credit.com has bought protection on the same name. We would only need to match the terms where protection is bought and sold by the same Legal entity on the same name. Your response will be greatly appreciated. Thanks, Elaine.
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