Message-ID: <15066761.1075863363331.JavaMail.evans@thyme> Date: Wed, 12 Sep 2001 12:35:30 -0700 (PDT) From: rick.buy@enron.com To: david.port@enron.com Subject: FW: Systemic Market Risk to Follow NYMEX Failure Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Buy, Rick X-To: Port, David X-cc: X-bcc: X-Folder: \RBUY (Non-Privileged)\Buy, Rick\Sent Items X-Origin: Buy-R X-FileName: RBUY (Non-Privileged).pst fyi, rick -----Original Message----- From: Brad.Horn@nuon.com [mailto:Brad.Horn@nuon.com] Sent: Wednesday, September 12, 2001 2:00 PM To: Buy, Rick Subject: RE: Systemic Market Risk to Follow NYMEX Failure RICK: =20 Thanks for your note and staying in touch during a time when a huminata= rian crises could easily spiral into something where the worste news is ye= t to come. Here is what Ive found out... =20 NYMEX has contingencies (which they are yet to exercise) for back-up cl= earing, as well as a back-up site for open outcry trading. In the past, th= e first contingency has been exercised several times and is proven, though = the later has never been tested in practice. Meanwhile, clearinghouse paym= ents have been delayed as a result of the NYMEX closing and the exchange is= likely to remain closed through the balance of the week (thus eliminating = the need for daily payments). During this time the exchange is closed, an = effort is to be made to trigger one or both of the contingencies above (bas= ed on yet to be clarified damage assessments). The fact that some degree o= f transaction data integrity exists suggests that long-term payment perform= ance from NYMEX is not likely to be a problem. However, if clearing paymen= t delays extend past the end of the month when swaps settle, then we may se= e delayed payments from weaker credits in related swap and physical markets= . In this regard, the markets have breathing room since the terrorist atta= cks didnt occur late in the month. Finally, there have been general commen= ts from Treasury and Fed Bank officials to guarantee stock exchange payment= s, and the assumption is that the same guarantees would apply to the NY com= modity exchanges (but this asumption has not been validated or addressed di= rectly in public comments). Hope this helps. Brad. -----Original Message----- From: Buy, Rick [mailto:Rick.Buy@ENRON.com] Sent: woensdag 12 september 2001 17:52 To: Brad.Horn@nuon.com Subject: RE: Systemic Market Risk to Follow NYMEX Failure Was out of town but back now. I asked my group to look at your note and app= rise me. Will let you know when they do. Tx Rick -----Original Message----- From: Brad.Horn@nuon.com [mailto:Brad.Horn@nuon.com] Sent: Tuesday, September 11, 2001 11:30 AM To: rbuy@enron.com Subject: FW: Systemic Market Risk to Follow NYMEX Failure Rick:=20 In light of recent events at the world trade center, Im concerned a= bout the poitential for a systemic failure following the destruction of NYM= EX. A quick note from you to confirm or deny would be appreciated. For example, if NYMEX payments are delayed significantly, Im worrie= d that a larger payment failure in the energy derivatives market might foll= ow. In this scenario, Enron?s large NYMEX position could put it in jeoprar= dy. As a result, I would think you would know before others if a NYMEX cle= aring falure is in the works. Do you have any insight at this time into NY= MEX payment performance????? ********************************************************************** This e-mail is the property of Enron Corp. and/or its relevant affiliate an= d may contain confidential and privileged material for the sole use of the = intended recipient (s). Any review, use, distribution or disclosure by othe= rs is strictly prohibited. If you are not the intended recipient (or author= ized to receive for the recipient), please contact the sender or reply to E= nron Corp. at enron.messaging.administration@enron.com and delete all copie= s of the message. This e-mail (and any attachments hereto) are not intended= to be an offer (or an acceptance) and do not create or evidence a binding = and enforceable contract between Enron Corp. (or any of its affiliates) and= the intended recipient or any other party, and may not be relied on by any= one as the basis of a contract by estoppel or otherwise. Thank you.=20 **********************************************************************