Re: UK Financial Services Regulation

Does the proposed reorg now contemplate that a US entity will act as
principal for financial transactions?

Paul Simons
05/25/99 05:07 AM
To: ECT London European Trading
cc:
Subject: UK Financial Services Regulation

The FSA (Financial Services Authority) recently published for the first time
details of the exemptions from regulation which will be available under the
legislation replacing the current Financial Services Act 1986 (the "Act").

As you know, ECTRIC is currently an unregulated booking company for our
European financial trading business. As such, ECTRIC is not required to
maintain what would otherwise be significant regulatory capital and is not
subject to conduct of business rules. ECTRIC's status as an unregulated
entity rests on exemptions which available under the Act. It is clearly
important that equivalent exemptions are available to ECTRIC (and to the new
US booking entity under the proposed reorg) under the replacement
legislation.

From an initial view, the existing exemptions we rely upon will be available
under the new regime. However, the "devil's in the detail" and so I am
working through the exemptions in detail with Slaughter and May.

Please give me a call on x6566 if you would like to discuss this area.

Paul