Re: APX - Membership Application

Mark:

One issue to keep in mind regarding membership in this exchange: if there is
no clearing house and the exchange is the counterparty to all transactions,
who bears the liability when a third party defaults? We certainly need to
know if it is the exchange membership. If not, how is the liability limited
and on whose credit would we be relying if we trade?

Mark

Mark Elliott
04/06/99 06:02 AM
To: ECT London European Trading
cc:
Subject: APX - Membership Application

Just to let you know that last Thursday, we submitted, in the name of Enron
Capital & Trade Resources Limited, an application at very short notice to
become one of the first members of the Amsterdam Power Exchange.

The Exchange still has many outstanding issues to resolve re its mode of
operation and I shall keep you informed of progress. The Exchange is due to
go live, however, at the beginning of May 1999 but our feeling is that there
are so many substantial issues remaining to be resolved that either it shall
not hit this deadline or, if it does, it will be in a very chaotic state.
However please note that initially it is proposed that the Exchange is simply
for day-ahead physical power deals; the Exchange is the counterparty to
transactions and there is no separate clearing house.

It is proposed that at some future stage a financial futures' market will
develop when our SFA-regulated entity will then have to become an Exchange
member - but this is some way off.

Kind regards

Mark