Message-ID: <22189954.1075863435192.JavaMail.evans@thyme> Date: Fri, 3 Aug 2001 06:56:05 -0700 (PDT) From: j.kaminski@enron.com To: j.kaminski@enron.com Subject: Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kaminski, Vince J X-To: Kaminski, Vince J X-cc: X-bcc: X-Folder: \VKAMINS (Non-Privileged)\Kaminski, Vince J\Sent Items X-Origin: Kaminski-V X-FileName: VKAMINS (Non-Privileged).pst Greg, A short summary of the proposed modes of cooperation with Prediction Company. I. Projects (in the order they suggested it). 1. Prediction Company develops a P&L attribution system (allocation of P&L to different market factors, like spreads, volume, trader's skills, etc.). Trader's performance evaluation system. 2. Decision support system: a model recommending transactions to a trader without full trade automation. 3. Fully automated trading system, setting prices and executing trades on an electronic trading platform. II. Financial arrangements. Combination of a number of different forms of equity participation, direct payments per project on completion, and fees per transaction. 1. Equity investment would reduce fees and payments. For Prediction Company, this is a preferred form of Enron's participation. 2. Payment per project would look like consulting fees. 3. Next to equity investment, they would like to see a constant income stream through fees charged per transaction. My comment: in case they design a decision support tool, it will be difficult to come up with a per transaction fee. It will be difficult to identify decisions that can be attributed exclusively to their system. Recommendations: 1. A visit to Santa Fe with Kevin Garland to discuss an equity investment. 2. I shall try to dig up more information about the company and the relationship with UBS. 3. We should come up with a solution that will help to transfer skills to Enron from Prediction Company.