Subject: RE: EOL
From: legal <[email-masked]>
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked]
Date: Wed, 26 Sep 2001 08:17:19 -0700 (PDT)

Thanks for your note.  Just so you have the whole picture -- our analysis from a US law perspective is that there is a tension between wanting the transactions on the system to be enforceable and wanting out of the mistake trades.  The offline unwind is by far the best approach when the mistake is not blatant since it assumes the binding nature of the original trade.  We have been handling these by using a written termination rather than a reverse trade.  This is universally the approach we have taken when our traders have agreed to let a customer out of a trade the customer claims was done by mistake on their part.  This happens often enough that we have given the confirm desk a termination agreement form to use as needed (Tana can get you a copy if you want it).  But when the counterparty refuses to let us out of a trade that is a mistake on our part, our only hope is that the mistake is so blatant that we can claim mutual mistake.  Under US law when there is mutual mistake the contract is actually never formed.  In that case, the original trade is not enforceable and there is nothing to unwind.  One alternative we have used is to simply remove the transaction from the customer's "completed transactions" section as if it had never happened.  As far as I know, we have only had to do this once or twice.

 -----Original Message-----
From: 	Boyd, Justin  
Sent:	Wednesday, September 26, 2001 8:55 AM
To:	Taylor, Mark E (Legal)
Subject:	EOL

Mark

We do have mistakes from time to time, as you suspected.  In almost all cases, the respective traders agree to cancel these by entering into a back to back offline trade.  None has been of sufficiemt gravity to be brought to my attention

J