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Enron Mail |
Lucy:
Tana tells me you are looking for some guidance as to which Enron entity should be used for booking trading transactions with various counterparties. There are a couple of general rules that apply to "normal" trading circumstances and I'll spell them out below, but remember that these are not hard and fast rules and may go straight out the window when circumstances vary (even just a little bit) from "normal." For example, abnormal situations exist where the trading transaction is in connection with another transaction with an Enron company (e.g. a financing or equity investment), the counterparty has a legally justifiable desire to trade with a certain Enron company, the product being traded is only traded by a particular Enron company or the counterparty is in a jurisdiction outside the country where we are trading (except as spelled out below). Having said all that, the following rules (generally tax driven) can be used as general guidelines: 1. If there is no master agreement in place between the counterparty and an Enron company, the trade should be entered into on behalf of the Enron company based in the country where the Enron trader is when the trade is concluded and, if there is any hope of further trading with the counterparty, Credit and Legal should be notified to negotiate a master agreement. Of course, if the counterparty is outside the country where we are trading, Legal should be consulted ahead of time (there are some countries where derivatives are actually illegal, special procedures must be followed or can't be done by us from the U.S.). 2. If there is a master agreement between the counterparty and either ENA or Enron Canada, and the Enron trader is in the U.S. or Canada, the trade should be entered into by the trader on behalf of the Enron company that is party to the master agreement. If the trader is outside of the U.S. or Canada, other rules may apply. 3. If there is a master agreement between the counterparty and ECT International (usually only European counterparties), and the Enron trader is in the U.S. or the U.K., the trade should be entered into by the trader on behalf of ECT International. Note that there are special considerations if the trader is in the U.K. based on U.K. regulatory issues (the trade is actually "arranged" by Enron Europe Finance and Trading Ltd. on behalf of ECT International). If such a master exists but the trader is not in the U.S. or U.K., the trade should be handed off to a trader located in one of those two countries for final negotiation and execution. It would be a good idea to consult with Legal or Tax if this comes up for more specific advice. These general rules relate to which Enron entity should be the legal counterparty to the transactions. This doesn't determine where within the Enron family the actual risk should ultimately reside. If we want the risk to be in an Enron company other than the Enron counterparty for contractual purposes, an intercompany transaction should be booked (probably through RMT) to get the risk in the right place.
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